How Harvard Flunked Economics / Bring Me the Head of Paul Ryan

04.14.2017

WHEN
BILLIONAIRES
ATTACK
MEET TRUMPS
1 PERCENTERS
LOOTING AMERICA
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 APRIL 14, 2017 VOL.168 NO.13

+
EXECS EDUCATION:
CEOs wait to speak to
the media at the White
House after a meeting
about the economy
with President Barack
Obama in 2009.

20 Politics
Speaker of the
House of Cards

NEW WORLD

46 Skin
Tactile Advantage

48 AI
A New Leash
on Life

50 Drugs
Pick a Number,
Any Number

53 Space
Meteors to Order

DOWNTIME
FEATURES DEPARTMENTS
54 Atheists
No Reason
to Believe
The Billionaires
24 BIG SHOTS
March on Washington 57 Cults
The Ultimate Kicks
4 Pohang,
Theyve been coaxed out of their mansions and off South Korea
their yachts by President Trump to make America great Pounding Sand 58 Fake News
againfor the very, very rich. by Nina Burleigh Trump Owes
6 Bentiu, Me $900!
South Sudan
Hungry for Help 62 Nazis
How Harvard
34 8 London The Meth in
Flunked Economics Brexit Wounds Their Madness
If you want to know why the U.S. economy is a 10 Mocoa, Colombia
Lethal Mud 64 Rewind
mess, look to the Harvard Business School and 20 Years
its army of craven MBAs. by Duff McDonald

PAG E O N E
DAVIDOF F STUDIOS/G ET T Y

COVER CREDIT: ILLUSTRATION BY ALEX FINE

12 China
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SHOTS

SOUTH KOREA

Pounding
Sand
Pohang, South
KoreaSouth Korean
marines hit the beach
on April 2 during
a joint U.S.-Korea
landing operation
thats part of the
annual training held
by the two countries.
As U.S. destroyers cut
through the seas off
South Korea and F-18
fighter jets took off
from the nuclear-pow-
ered carrier USS Carl
Vinson, the dictatorial
regime in North Korea
threatened to attack
if any U.S. or South
Korean troops stepped
on its turf. President
Donald Trump shook
up the situation on
the Korean Peninsu-
la when he told the
Financial Times in
an April 2 interview,
Well, if China is not
going to solve North
Korea, we will. That is
all I am telling you.

KIM HONG-JI
KIM HONG-J I/REUTERS
BIG
SHOTS

SOUTH SUDAN

Hungry
for Help
Bentiu, South
SudanAs famine
strikes the region,
a woman and her
children rest in the
pediatric ward of
a Doctors Without
Borders hospital on
March 23. Famine
and starvation are
threatening over 20
million people across
South Sudan, Soma-
lia and Nigeria. We
are facing the largest
humanitarian crisis
since the creation of
the United Nations,
U.N. Emergency
Relief Coordinator
Stephen OBrien told
the Security Council
on March 10. We
need $4.4 billion
by July, and thats a
detailed cost, not a
negotiating number.
SIEGF RIED M ODOL A / REUTERS

SIEGFRIED MODOLA
 BIG
SHOTS

ENGLAND

Brexit
Wounds
LondonIts perhaps
the worlds most
complex divorce,
and now its officially
happening. Less than
a year after Britain
voted to exit the Euro-
pean Union, Prime
Minister Theresa May
began a two-year
process of political
and economic nego-
tiations to leave the
bloc of 27 remain-
ing nations. Some
celebrated the move,
noting it has not
proved to be an eco-
nomic catastrophe.
Others, like these two
protesters outside of
the House of Com-
mons on March 29,
were less optimistic.

MATT DUNHAM
MAT T DUNHAM /AP
LUIS RO BAYO/AFP/GET T Y
 BIG
SHOTS

COLOMBIA

Lethal
Mud
Mocoa, Colombia
A boy rests next to a
motorcycle on April
2, after floods and
mudslides killed more
than 200 people. Res-
cue workers flocked
to the city, clawing
through rubble and
debris to look for
survivors. Despite the
lack of food, elec-
tricity or clean water,
survivors and rescue
workers remained
undeterred. As one
woman told Reuters
as she searched for
her daughters and
granddaughter: I
need to know where
they are. If they are
dead, please, God
deliver them to me.

LUIS ROBAYO
 P A G E
PANAMA CHINA IRAQ
SPY TALK
CHINA CHECKERS
As Beijing expands its efforts to
recruit CIA spies, some fear Chinese
moles have dug their way into Langley
GLENN DUFFIE Shriver looked like an ideal CIA
recruit. Gregarious and athletic, the 28-year-old
from Michigan had been a good student with
strong interests in world affairs and foreign lan-
guages since childhood. What made him even
more attractive as a prospective CIA employee,
however, was that he had studied and worked in
China and was fluent in Mandarin.
But when CIA investigators began digging
deeper into his experiences in China, they
began to suspect that he had been dispatched by
Beijings spymasters. Under questioning during
his pre-employment polygraph test in 2010,
he grew so nervous that he withdrew his appli-
cation on the spot and virtually bolted from
the room, according to subsequent accounts.
Months later, as he was boarding a plane to
leave the U.S., he was arrested by the FBI and
charged with trying to infiltrate the CIA as a
Chinese mole. He was sentenced by a federal
court in Virginia to four years in prison.
Today, the Shriver case is still rattling the CIA,
NEWSWEEK
O N E
AFGHANISTAN POLITICS SYRIA
according to sources with deep familiarity with
the spy agencys China coverage. While Beijings
premier espionage service, the Ministry of State
Security, or MSS, had previously focused on pen-
etrating U.S. security by seducing or blackmailing
Chinese-Americans, the Shriver case showed a
new and daring attempt to recruit students from
Norman Rockwells America.
The arrest on March 28 of a State Department
employee, Candace Marie Claiborne, on charges
of lying to the FBI about her contacts with Chi-
nese intelligence agents will only add to what one
former CIA official calls paranoia about Bei-
jings espionage offensive. A year or two ago, [the
CIA] went through a very big mole scare because
very high-level [Chinese] sources were getting
wrapped up, a former senior U.S. intelligence
analyst tells Newsweek, asking not to be quoted
by name on such a sensitive subject. Once that
started to happen, they felt that there was some- BY
thing internal, and thats when they started really JEFF STEIN
clamping down on whom they were hiring. @SpyTalker
12 A P R I L 14 , 2017
 +
UNEASY RIVALS:
As China became a
global superpower
over the past 15
years, it expanded
its efforts to spy on
the United States.
FBI

NEWSWEEK 13 A P R I L 14 , 2017

Former top CIA lawyer Robert Eatinger recalls
an intense interest at the agency in uncovering
suspected Chinese moles around the time he
was retiring in 2015. I dont remember whether
it was the last one, two or three years that I knew
of it, he says. He and other CIA veterans con-
sulted by Newsweek declined to talk more specif-
ically about particular cases.
The problem with those stories is theres
always a rumor, a top former CIA official says.
I think theres always worries that someones
gotten through the system, but Im not really
aware that there is a specific hunt going on at this
point. The CIA does not comment on such sensi-
tive matters. Mole hunts are carried out by a very
small group of counterintelligence specialists in
large measure because of the dangers to reputa-
tions and that sort of thing, says the former CIA
official. Its kept very, very quiet.
But the Shriver case gave the security folks a
big concern about the targeting of American stu-
dents in China, says Dennis Wilder, the CIAs
deputy assistant director for East Asia and the
Pacific from 2015 to 2016. And today theres a
far greater scrutiny of anyone who has spent time
in China as a student, particularly on the lon-
ger-term programs.
As a result, he says, the CIAs recruitment of
some of its best-qualified applicants has stalled.
And that has damaged the agencys ability to
understand whats going on inside China. When it
shunts applicants who have traveled widely in the
NEWSWEEK
GUT TER CREDIT
+
A MOLE: Shriver
had studied and
country, the CIA has to train more of its analysts worked in China
on China from scratch, starting with language before applying to
the CIA. During a
courses, adds Wilder, who served as the top Asia polygraph test in
expert in the George W. Bush White House. It can 2010, he grew so
nervous he with-
take a year of intensive daily classes to master drew his applica-
more than rudimentary Mandarin or Cantonese, tion on the spot.
just two of the dozen main tongues on the main-
land, many of which are mutually unintelligible.
CIA spokesman Dean Boyd concedes that
those applicants whose associations and travels
pose elevated risks receive elevated scrutiny.
But he says the CIA has hired and continues to
hire such individuals if they meet our security
standards.
That is a truism, according to other top former
intelligence officials: The CIA continues to hire
applicants whove spent time in Chinaat least
those whove withstood a security check that
can take two years. But the critics stand by their
assertions that the agencys heightened security
sensitivity to applicants with multiple visits to
China has also cost it high-quality talent. If you
have that on your background, your rsum is just
tossed in the trash, because they are so paranoid
ANDREW HARRER /B LOOM BERG/GE T T Y
about MSS penetration and co-opting students, a
former senior CIA intelligence analyst tells News-
week on condition of anonymity.
AMERICAN SEDUCTION
For decades, the MSS, Chinas intelligence
agency, primarily targeted Chinese-Americans,
especially those working in the defense and intel-
14 A P R I L 14 , 2017
ligence agencies or in sensitive American indus-
tries, for recruitment. (That has led the FBI, some
critics say, to racially profile Chinese-Americans,
particularly academics and scientists who do
business with China, as espionage suspects.)
The Shriver case alarmed agency security offi-
cials because it signaled a departure from the
recruiting norm of the MSS. And there have been
additional efforts by Chinese intelligence to infil-
trate the CIA with non-Asians, Wilder and oth-
ers say. According to Larry Pfeiffer, who served
as chief of staff to CIA Director Michael Hayden
from 2006 to 2009, Your natural assumption
is that hes not the only one. Indeed, the CIAs
Office of Security conducts studies after a
breach, he says, to determine the chances that
others with a similar profile got through the
wickets. In Shrivers case, the likelihood was
that others could have been recruited.
The MSS began widening its net after a high-
level debate in the politburo under Hu Jintao,
Chinas president from 2002 to 2012, according
to well-informed sources. Beijings leading eco-
nomics and financial officials argued that China
should avoid further antagonizing the United
States, its top trading partner. But Beijings intel-
ligence and military officials won the debate with
arguments that China had arrived as a super-
power and should pursue a more muscular cam-
paign against the U.S. Its 2014 cybertheft of some
18 million U.S. government personnel files was
just one prong of the escalation. Its militarization
of contested South China Sea atolls and islands
was another. Expanding its espionage offensive
into the seduction of non-Chinese-Americans
was yet another.
The big change that has occurred in recent
years is that all Americans are now a target, much
more than ever before, says Wilder, now a senior
fellow at Georgetown Universitys Initiative for
U.S.-China Dialogue on Global Issues. Their
security service, their officers are more sophis-
ticated on the West now. Theyve got better lan-
guage skills. Theyve got these opportunities with
all these students and others coming to China, so
they can do the recruitment on home ground.
BEFUDDLED AND BAMBOOZLED
In 2014, the FBI posted a video dramatization of
Shrivers recruitment by the MSS on its website.
Produced as a warning to young Americans in
China, Game of Pawns also comes off as a tri-
umph of U.S. spy catchers.
But Harry Skip Brandon, a former FBI dep-
uty assistant director for counterintelligence,
suggested that the MSS reaped a reward even
from Shrivers failure. They couldve just been
NEWSWEEK
PAGE ONE/CHI N A
trying to bamboozle us, says Brandon, who
battled Cuban intelligence for years. During the
Cold War, he recalled, the Soviet KGB convinced
James Jesus Angleton, the CIAs legendary coun-
terintelligence chief, that it had riddled the
CIA with spies. Angleton became so paranoid,
according to many accounts through the years,
that he virtually paralyzed the CIAs recruitment
of Russian agents. While the Chinese likely did
not plant Shriver as someone to be caught and
trigger paranoia at the CIA, Brandon says, its
possible they now see a benefit from creating
suspicion in the agency about applicants with
sterling China backgrounds and language skills.
And that suspicion has spread to job seekers
with similar experiences in, or family ties to,
places like Iran, Russia, Syria, Pakistan and the
THE SHRIVER CASE
SHOWED A NEW AND
DARING ATTEMPT TO
RECRUIT STUDENTS
FROM NORMAN
ROCKWELLS AMERICA.
former Soviet satellites in Eastern Europe, say
former CIA officials. We had a regular meet-
ing with the head of counterintelligence, and we
never looked forward to that, says Pfeiffer. It
was all doom and gloombecause of the num-
ber of cases that they were working that were of
significant concern.
Or, as the old joke goes, just because youre par-
anoid doesnt mean someones not out to get you.
Shriver says as much in a coda to Game of
Pawns. Recruitments going on, he says
from his jail cell, in a warning to other young
students headed to China. Dont fool your-
self. The recruitment is active, and the target is
young people: Throw lots of money at them, see
what happens.
15 A P R I L 14 , 2017
 P A G E O N E / P A N AMA
ALL THE PRESIDENTS STRONGMEN
Some 20 years later, the war in
Panama is a cautionary tale about
an American president who misled
the country for political purposes
DID YOU SEND cocaine to the United States?
Jams, jams, jams! the man in the orange
jumpsuit said. Never, never, never!
It was 1995, and I was inside a federal prison
in Miami, interviewing General Manuel Antonio
Noriega in a claustrophobic cell. The Panama-
nian strongman was smaller than I had remem-
bered from when I had triedand failedto
speak to him years earlier in Panama. He didnt
resemble the machete-wielding murderer the
U.S. had made him out to be.
I thought of this encounter in March when I
learned Noriega was in a coma after brain sur-
gery in a hospital in Panama City (he remains
on a ventilator and in critical condition). After
our prison interview, Random House hired me
to gather his memoirs for a book. What emerged
was less a story about Noriega than a cautionary
tale about an American president who misled the
country for political purposes.
Following about a year of Miami jailhouse
interviews, Random House published the mem-
oir, Americas Prisoner. The publisher paid a flat
fee for my work, and I had no financial connec-
tion to Noriega. Separately and independently, I
evaluated what he had to say and provided more
than 70 pages of analysis of U.S. policy leading
up to the invasion. To sum up his view of what
had happened to him, Noriega said simply, You
NEWSWEEK
have to create a problem in order to solve it.
The Panamanian general had spent part of his
military career on the CIAs payroll. As a student,
he was a paid informant on leftist activities. Later,
as intelligence chief in the 1970s for his mentor,
General Omar Torrijos, Noriega earned the trust
of the CIA and its onetime director, George H.W.
Bush. And as Panamas supreme leader in 1983,
Noriega helped the United States avert a major
conflict with Cuba during President Ronald Rea-
gans gunboat invasion of Grenada, by acting as
a go-between with Fidel Castro.
Noriegas friendship with the United States
wavered, then collapsed, as Reagan and Bush
pursued an anti-communist policy in Central
America, giving military and financial aid to
right-wing governments and freedom fight-
ers against leftist guerrillas in El Salvador and
Guatemala and the leftist Sandinistas in Nica-
ragua. The general refused to help. Those were
the years of Marine Lieutenant Colonel Oliver
Norths abortive campaign to fund Nicaraguan
JE AN- LOUIS ATL AN/SYG MA /G ET T Y
insurgentsthe Contraswith money raised by
selling weapons to Iran. The scandal, known as
the Iran-Contra affair, almost brought down the
Reagan presidency.
By the late 1980s, near the end of the Cold War, BY
Reagan was well into his second term. He was also PETER EISNER
confronting the rise of South Americas cocaine @PeterEisner
16 A P R I L 14 , 2017
 +
A JUST WAR?
Bush was seeing
low approval cartels and sometimes conflated the communists
ratings and being
called a wimp and the narcos. At one point, he declared, Latin
peoples by the millions might eventually flee
when he decided to
send 25,000 U.S. communism to the south and threaten the Ameri-
troops to Panama.
can heartland. (But even Reagan did not advocate
building a wall.) Rather than talking about put-
ting up a fence, he said, why dont we work out
some recognition of our mutual problems?
In 1989, the outgoing Reagan administration
had charged that Panama was a major trans-
fer point for cocaine shipments en route to the
United States. (Thenand nowmost U.S.-
bound cocaine came into the country through
other Central American countries and Mexico.)
That May, four months after Bush took office,
Panama held its own presidential election. While
voters went to the polls every five years, the mili-
tary had controlled the government since a 1968
coup. Noriega annulled the election when the
U.S.-backed candidate appeared to win.
He had reason to think he could get away with
such tinkering. The Reagan administration did
not complain during the previous presidential
election in 1984, in which Noriegas candidate,
Nicols Barletta, was declared the winner by a
narrow margin. The leading candidate, former
President Arnulfo Arias, had been deposed
three times (often with U.S. support) and was
NEWSWEEK
WHAT DO YOU DO
WITH A RABID DOG?...
YOU CUT OFF ITS HEAD.
an embarrassment to the U.S. due to his pro-
Nazi sentiments during World War II. Despite
charges of election fraud, Secretary of State
George Shultz and former President Jimmy Car-
terwho as an official election observer would
later criticize Noriega for corruptionattended
Barlettas inauguration.
In the fall of 1989, Bushs inability to deal with
Noriega contributed to his low approval rat-
ings: It made him look weak, a charge that had
followed him for years. In 1980, William Loeb,
the right-wing publisher of the New Hampshire
Union Leader, had derided Bush as an incom-
petent wimp, and the word stuck. His political
opponents often referred to his Ivy League ped-
igree and implied he was not capable of taking
strong military action. Now Noriega was defying
the United States, and the word wimp again was
appearing in print. On December 20, 1989, Bush
sent 25,000 troops into Panama.
17 A P R I L 14 , 2017

Bush justified the invasioncode-named Oper-
ation Just Causeon national security grounds.
Noriega, he said, was a drug dealer who had
declared war on the United States, threatened
the lives of Americans living in Panama and now
threatened the security of the Panama Canal.
None of that was proved true. Noriega had not
threatened America, and a Panamanian attack on
the canal was not even possible. Even without
an invasion, the United States maintained Air
Force and Navy bases; under the 1977 Panama
Canal Treaty signed by Carter and Torrijos, the
United States was responsible for security in
the Canal Zone surrounding the waterway until
December 31, 1999.
As Newsdays Latin America correspondent, I
reported from Panama before, during and after
the invasion. The United States spent hundreds
of millions of dollars to attack a country that
offered little resistance. Several miles from the
city, billion-dollar stealth bombers hit a Pana-
manian airfield to stop a tiny air force that had no
planes there. Residents of Panama City were at
home preparing for Christmas when the Amer-
ican bombs blasted the unlucky neighborhood
around Noriegas military headquarters, igniting
fires that killed scores of people. Panamas police
force and army dissolved, criminals broke out of
NEWSWEEK
+
FRIEND OR FOE:
Noriega was on the
jail, and looters rampaged through the city. CIAs payroll for
After less than two weeks, it was over. More years before the
United States ac-
than 20 Americans soldiers and three civilians cused him of drug
had died, while estimates of Panamanian casu- dealing and threat-
ening the security
alties ranged from 300 to more than 2,000, most of America.
of them civilians. Once, during a reporting trip,
I saw a charred human torso in a burned-out
car and a heap of corpses festering in an open
room at the city morgue. Later, after U.S. troops
attacked a military academy, I saw the brains of
young cadets splattered on the walls.
The American press grudgingly approved of the
invasion. Mr. Bush was not obliged to act, The
New York Times editorialized the morning after,
but he was justified in doing so.... The President
acted in response to real risks. Bush got what he
had wanted: Not long afterward, his poll numbers
began to rise.
In interviews, before, during and after the
conflict, American civilian and military officials
told me there was no justification for the inva-
sion. A top Drug Enforcement Administration
official said Noriega had helped prosecute the
drug war and safeguard the lives of U.S. agents.
Before the invasion, a former CIA station chief
JOHN HOPPE R /AP
in Panama told officials he would likely be able
to convince Noriega to leave power without a
fight. He was not allowed to try.
18 A P R I L 14 , 2017
 Other key U.S. officials resigned rather than
participate in the war. General Frederick Woerner
Jr., based in Panama as head of the U.S. Southern
Command, quit a few months beforehand. Admi-
ral William Crowe, chairman of Joint Chiefs of
Staff, also resigned.
Some of the key players involved in the inva-
sion went on to play major roles in the 2003 Iraq
War. Dick Cheney was the secretary of defense
at the time, Colin Powell replaced Crowe as the
newly minted chairman of the Joint Chiefs, and
Elliott Abrams was the State Department official
leading the charge against Noriega.
Ten days after the invasion, American troops
seized Noriega at the Vatican Embassy, and U.S.
marshals led him to Miami in chains. Only then
did officials in Bushs Justice Department realize
they needed some justification for the seizure
and imprisonment of a foreign military leader.
They dusted off a 1988 indictment that implied
a criminal liaison between Noriega and Castro.
They later dropped that charge and decided
to cobble together more specific claims about
Noriegas connection to the Medelln drug cartel.
In 1992, Noriega was tried and convicted on
eight drug trafficking and conspiracy counts in
federal court in Miami. His 40-year sentence
was reduced by 10 years after a former CIA sta-
tion chief and a former U.S. ambassador spoke
on his behalf.
By that time, I had already begun investigating
the story. I found more than reasonable doubt
about his guilt. The government prosecuted the
case with the testimony of 26 convicted drug
traffickers who received plea bar-
gains that allowed them to get
out of prison and, in some cases,
keep their drug profits. One of I SAW A CHARRED HUMAN
them was Carlos Lehder, a neo-
Nazi from Colombia, then the TORSO IN A BURNED-OUT
most important trafficker ever CAR AND A HEAP OF CORPSES
captured by the United States.
He had never met Noriegaand
FESTERING IN AN OPEN ROOM
neither had the other dealers AT THE CITY MORGUE.
who testified against him.
U.S. District Judge William
Hoeveler, who tried the case,
invited me to his home after Noriegas conviction
and sentencing for a series of unusual talks in
which he expressed concern about how the trial
and verdict would be judged. I hope, in the end,
well be able to say that justice was served, he
said. He and other U.S. officials took solace in the
fact that even if the drug conviction was ques-
tionable, Noriega was clearly a murderer.
But the sources I interviewed raised serious
questions about one charge against him. In 1993,
NEWSWEEK
PAGE ONE/PAN A M A
Noriega was convicted in absentia in Panama of
conspiracy in the 1985 murder of Hugo Spada-
fora, a political protg turned opponent. A key
piece of evidence was that the National Secu-
rity Agency had intercepted a remote telephone
communication in which Noriega allegedly
ordered the killing: What do you do with a rabid
dog?... You cut off its head.
Multiple U.S. sources told me the intercept
did not exist. They said the NSA did not have
the capability at that time to capture communi-
cations between Noriegawho was in France
when Spadafora was killedand his minions in
the Panamanian jungle. I determined that the
charges had been made up in part by a Panama-
nian newspaper columnist and author, Guillermo
Snchez Borbn. He admitted to me he could cite
no source for reporting the killing of Spadafora in
a book, In the Time of the Tyrants, that he co-wrote
with an American expatriate, Richard Koster. It
is a political book, not a historical book, Sanchez
Borbn said. It has its inexactitudes.
Noriega served more than 20 years behind
bars in the United States, then in France and
finally in Panama, which won his extradition in
2011. I cannot say that he did not commit crimes,
including murders, although he told me any kill-
ing on his watch took place in the course of mil-
itary operations. Nor can I say he never allowed
drugs to be dealt in Panama, nor would I ever
say that he was an enlightened leader. I can say
that the charges against him in the United States
were very thin. I also concluded that to whatever
degree Noriega was guilty, this was a matter for
Panama to determine, not the United States.
19 A P R I L 14 , 2017
 SPEAKER OF THE HOUSE OF CARDS
As the GOP pursues tax reform and
spending cuts, divisions within the
party threaten its ambitious agenda
and Paul Ryans power

PAUL RYAN was fresh off one of the most hum-
bling defeats of his career. It was days after the
collapse of his partys seven-year quest to repeal
Obamacare, and Ryan, the speaker of the House,
was set to appear at a Republican caucus meeting
in Washington, D.C. The blame game had already
begun, with anonymous White House sources
sniping at Congress and conservative commen- BY
tators publicly calling for Ryan to step down. But EMILY CADEI
instead of recriminations, members gave their @emilycadei

NEWSWEEK 20 A P R I L 14 , 2017
 speaker a standing ovation as they convened
on March 28, says Texas Representative Randy
Weber. I actually texted him...when I heard of
PAGE ONE/POLI T I C S
people calling for him to step down, says Weber.
And I said, Paul, dont even think about it.
Even President Donald Trump, who had a
famously fractious relationship with Ryan during
the 2016 campaign, voiced his support for the
speaker in the wake of the decision to cancel
a House vote on the health care bill. (Trump a money monopoly.
did, however, punch out a cryptic tweet, which Not long after Trump threatened to campaign
seemed to align the president with a Fox News against members who opposed the health care
hosts call to oust the speaker, though the White bill in their 2018 re-election efforts, conservative
House denies that was the intent.) mega-donors Charles and David Koch promised
Yet if Ryans job isnt in jeopardy, the health to spend millions defending the bills opponents.
care debacle raises questions about his relevance. And by rallying the grass roots on social media or
Rising partisanship and institutional changes cable news, members can pull in just as much, if
mean the power of the speaker is not what it not more, cash as Ryan can raise from Beltway
used to be. It doesnt help that the Wisconsin power brokers at a tony Washington fundraiser.
congressmans brand of traditional free-market, Carney also blames the speakers shrinking
corporate-friendly conservatism clashes with the leverage on the death of earmarksthe practice
populist strain that fueled Trumps electoral vic- of tucking funding for a lawmakers special proj-
tory. Those factors, along with a series of tactical
missteps, are what stymied Ryans health care
plan. And there are few signs those dynamics are
changing as Republicans pursue other priorities,
like tax reform, spending cuts and, possibly, a
RYAN AND TRUMP
second run at health care. BOUGHT INTO THEIR
Ryan still wields considerable power. As House
speaker, he can decide which bills move through
OWN NOTIONS THAT
the chamber and has an outsized say in what [OBAMACARE] WAS
goes into them. He also has strong relationships
across his caucus, as well as with key players in
SO UNPOPULAR,
the White House such as Vice President Mike ANYTHING THEY PUT
+
SAVING SPEAKER
Pence, Chief of Staff Reince Priebus and Health FORWARD WOULD
and Human Services Secretary Tom Price. He
RYAN: After the fail-
ure of the Republi- even appears to have made peace with Steve GET APPLAUSE.
can health care bill, Bannon, Trumps controversial presidential
Ryan talked about
the difficulty of adviser, although Breitbart News, the far-right
going from being an site Bannon once ran, continues to mercilessly
opposition party to
a governing party. attack Ryan. ects into legislation. Earmarks were an integral
But compared with House leaders even 10 part of the horse trading that went on during
years ago, the congressman has much less influ- bygone eras of Congress, when leaders sweet-
ence over how his members vote and virtually no ened legislative deals with money for bridges
opportunities for bipartisan compromise. Parti- and hospitals in districts of wavering members.
san squabbling has forced him to rely entirely Republicans banned them earlier this decade as
on votes from the GOPs unruly majority to pass part of their pledge to clean up Washington.
legislation, says Sarah Binder, a George Wash- However, analysts such as Binder and
ington University professor of political science. Norm Ornstein, an expert on Congress at the
Meanwhile, the changing nature of party poli- right-leaning American Enterprise Institute,
tics has dulled many of the tools congressional arent convinced earmarks would make much
JONATHAN E RN ST/ REU TE RS

leaders have to influence their members. As
columnist Timothy Carney pointed out recently
in the right-leaning Washington Examiner, the
rise of ideologically minded outside groups
like Americans for Prosperity and the Heritage
Action Fund mean party leaders no longer have
of a difference for Ryan. One former senior
congressional aide, who asked for anonym-
ity because of the subjects sensitivity, agrees.
Theres a lot leaders can do to win members
support beyond buying votes, he argues. A lot
of it has to do with just listening really closely to

NEWSWEEK 21 A P R I L 14 , 2017

PAGE ONE/POLITICS
what members want and then trying to address
their concerns, whether its in the same piece of
legislation or down the road. Ryan isnt much of
an arm twister, friends and foes agree, but hes a
pretty good listener, the aide says.
Its clear, however, that Ryan and company
werent doing enough listening during the
health care debate; they misread their caucus
and voters. The warning signs were obvious
from the beginning of 2017, when Republicans
in blue and purple states began worrying about
people losing their health insurance if the GOP
repealed Obamacare without putting anything
in its place. That forced Republican leaders
to hastily tack on provisions to their proposal
that would replace provisions in the 2010 law.
But it was far too little to stanch the coverage
losses nonpartisan observers predicted would
occur. An analysis by the Congressional Bud-
get Office estimated roughly 24 million more
Americans would become uninsured under the
GOP plan, panicking the partys more moderate
senators and House members. The
additions also pushed away con-
servatives, who complained the
proposal didnt do enough to rein
in costs or regulations.
RYAN ISNT MUCH OF AN
House Freedom Caucus mem- ARM TWISTER, FRIENDS
ber Dave Brat, an opponent of the
Ryan proposal, says he was get-
AND FOES AGREE, BUT HES
ting hundreds of phone calls from A PRETTY GOOD LISTENER.
constituents about the health care
overhaul, with the vast majority
against it. Here in the bubble, you
guys are all like, Theres tremendous pressure
on you. Why cant you do this? Well, because
theres 800,000 people back home, and we rep-
resent them. Go look at the polling on this!
A March 23 Quinnipiac University poll said just
17 percent of voters approved of the bill. The mea-
sures dismal approval rating quickly became a
rallying cry for GOP opponents in the chaotic final
two days of the debate. For GOP pragmatists and
hard-line Republicans alike, its hard to sell a bill
that offers billions in tax breaks to millionaires but
has cost increases or coverage losses for the poor,
elderly and those living in rural statesmany of
them Trump voters.
NEWSWEEK
Yet Ryana disciple of Ronald Reaganera sup-
ply-sider Jack Kempfailed to take into account
just how much the GOP coalition has shifted in
the past few years. Fiscal conservatives still reign,
but they increasingly have to respond to a work-
ing-class part of their base for whom government
programs like Medicaid arent evil but necessary.
Trump, after all, campaigned on the promise of
health care that would take care of everybody
and preserve Medicaid. The House proposal
achieved neither of those things.
Ryan didnt get much backup from outside
groups either. Before they rolled out Obamacare,
Democrats spent months cultivating key health
care players like the AARP, hospitals and insur-
ers. Republicans skipped that step as they hastily
crafted their repeal bill. And most of those pow-
erful lobbying groups quickly came out against
the Republican proposal. So did free-market
fiscal conservative organizations such as Amer-
icans for Prosperity, Heritage Action and Club
for Growth. There was no real cavalry in terms
of interest groups, laments former Republican
Representative Tom Davis.
Ornstein says the bills supporters seemed
to think that if the speaker crafted a policy and
Trump sold it, that was all they needed. They
bought into their own notions that [Obamacare]
was so unpopular, including with their own sup-
porters, that anything they put forward would
get applause. Instead, the debate over repeal-
ing Obamacare and the glaring inadequacies in
the Republican alternative have made the 2010
law more popular.
Public opinion, meanwhile, isnt too favor-
able toward many of the proposals in Republi-
cans next legislative efforttax reform. Here
again, Ryans approach runs against the populist
tide. The proposal would slash corporate and
personal tax rates, changes that would dispro-
portionately benefit the wealthy, according to
analysis by the nonpartisan Tax Policy Center.
Yet a Washington Post/ABC News poll from Jan-
uary found that just a little over a third of Amer-
icans support reducing income taxes on the rich.
22 A P R I L 14 , 2017
 +
COVER ME: Just 17
percent of voters
approved of the Even Republicans are split on the idea. I think
Republican health thats a key problem for them, says Binder.
care bill, which the
CBO said would Meanwhile, after the GOPs failure to pass a
leave an extra 24 health care bill, the White House has promised
million people un-
insured by 2026. Trump is going to come up with his own tax
reform plan. Spokesman Sean Spicer insisted
at a March 27 press briefing that Trump would
be driving the train on tax reform, though he
provided no details on when a proposal on that
would be unveiled.
BRENDAN SMIALOWSKI/AF P/G ET T Y
Ryan, meanwhile, insists he can unite his party.
At a press conference after the March 28 caucus
gathering, he sought to project an air of calm con-
trol. Since I became speaker, I have talked about
the need to go from being an opposition party to
being a proposition party and a governing party.
It may take a little bit more time, but we are cer-
NEWSWEEK
tainly listening, and we are going to get there, he
told reporters.
A few days later, however, as talks between
the Freedom Caucus and the more moder-
ate Tuesday Group were breaking down, and
Trump was attacking the former on Twitter, the
speakers tone became more ominous. I know
that [Trump] wants to get things done with this
Republican Congress, Ryan said in a March
30 interview with CBS. But if this Republican
Congress allows the perfect to be the enemy of
the good, I worry well push the president into
working with Democrats.
That wouldnt necessarily be the end of Ryans
speakershipWho else is there at this point?
asks Davis, the former congressman. But the
speakers gavel would feel pretty hollow.
23 A P R I L 14 , 2017
 The
BILLIONAIRES
MARCH N
WASHINGT N
Theyve been coaxed out of their
mansions and off their yachts by
President Trump to make America
great againfor the very, very rich
By Nina Burleigh

NEWSWEEK 24 A P R I L 14 , 2017
 MAKE IT REIGN: The
first official meeting
of Trumps Cabinet
convened in the White
House on March 13.
+

NEWSWEEK 25 A P R I L 14 , 2017
MR. MONOPOLY, that mustachioed fat cat, was
about as close as most Americans got to a New
York City billionaire until candidate Donald
Trump started flying his jet to their villages last
year. Now they are practically an everyday sight,
because President Trump has coaxed a pack of
them out of their penthouses and private jets to
either join his Cabinet or sit on his councils and
advisory boards. Trump voters know theyve had
a government for billionairesthats one reason
theyre so madbut to have one by billionaires
means the Mighty Oz is now setting the nations
agenda, and there is no curtain.
So what can Trump give to these men who have
everything? And what can they do for him, and to
America? The answer may be found in a line from
the Italian movie The Leopard, about the decaying
Sicilian aristocracy: Everything must change so
that everything can remain the same. The best
gift Trump can give his rich friends is to appear to
be shaking up the system while leaving their myr-
iad tactics for amassing capital unaffected. Less
than three months into his presidency, Trump is
well into that agendaquietly deregulating the
financial industry, stripping Barack Obamas cli-
mate change rules from fossil fuel producers and
promising to lower taxes on the very rich.
A billionaires takeover of the U.S. govern-
ment was not one of Trumps signature campaign
promises, but he has set up a government of, by
NEWSWEEK 26 A P R I L 14 , 2017
and for his peers (or men the famously insecure
Trump wishes to call peers). His Cabinet is the
FROM TOP: DREW ANGE RER /G ET T Y; B RENDAN MC DERMID/REUTE RS; PREVIOUS SPRE AD: MICHAEL REYNOLDS/GET T Y; PENNY 1 AND
richest in American history. These men have been
sold to the public as men who will help Trump run
the country like a business, in which the public
is the consumer. After careers in which they put
QUARTE R: AL E XANDER MAK AROV/AL AM Y; DOLL AR S IGN: ISTOC K /G ET T Y; PEN NY 2 : AL AMY; BANKNOTES: EKINYALGIN
growing their colossal bank accounts ahead of
the interests of small towns, working stiffs and
the common weal, there is no reason to believe
they will worry about how predatory lending or
letting Obamacare explode affects real people.
Trumps billionaires are not government-hating
ideologues like the Koch brothers or mega-do-
nor Robert Mercer. They are more like what
Trump used to beunaffiliated centrists. And
their agendaand now the countrys agendais
defined by those matters that affect their wallets.
PITY THE POOR, MISUNDERSTOOD
BILLIONAIRE
The rich arent rich anymore, says society writer
David Patrick Columbia. My friend inherited
hundreds of millions. She said to me, Im not rich
anymore. They didnt lose their money, but these
other people make billionssome of them make a
billion dollars a year. And thats all they really care
about. All those guys love talking about how much
money they have. Its what they like to do.
Most of the billionaires Trump lured to D.C.
are, like him, from the 1980s generation of lev-
 Everything must
change so that
everything can
remain the same.
CARL ICAHN
($16.6 Billion)
Provenance
Queens, New York,
1936. B.A., Princeton
University.
Company
Icahn Enterprises LP,
a conglomerate with
more than 90,000
employees and wide
array of investments,
from auto parts
to casinos to food
packaging, fashion
and real estate.
Famous Evil Deed
One of the original
1980s corporate
raiders, he gets
credit for killing
TWA, but perhaps
Icahns dirtiest
claim to fame was
masterminding the
now-illegal practice
of greenmail,
buying blocks of
stock in companies
and then forcing
those companies
to buy them back
at inflated rates,
as ransom to save
themselves from
takeover.

NEWSWEEK 27 A P R I L 14 , 2017
 STEPHEN
SCHWARZMAN
($11.8 billion)
Provenance
Huntingdon Valley,
Pennsylvania, 1947.
Undergrad at Yale,
where he was in
Skull and Bones with
George W. Bush. MBA,
Harvard.
Company
Co-founder of
Blackstone Group, a
multinational private
equity firm and one of
the largest alternative
investment outfits in
the world. It has $367
billion in assets.
Famous Evil Deed
He has been accused
of being the kind of
jerk who says things
like raising taxes on
the working poor
would make them
try harder because
theyd have skin in
the game, and who
objects to his servants
squeaky shoes. In
2008, when he was
worth only $8 billion,
he complained to a
New Yorker writer that
he didnt feel rich.

eraged-buyout tacticians, junk bond kings, cor-
porate raiders and vulture capitalists. They got
rich off emerging financial tactics crafted to take
advantage of Ronald Reagans great gift to Wall
Streetripping up regulations put in place after
the Great Depression. Trump adviser and corpo-
rate raider Carl Icahn is said to have been a model
for Michael Douglass Greed is good character
in Wall Street. Commerce Secretary Wilbur Ross,
policy adviser Stephen Schwarzman and unoffi-
cial adviser Stephen Feinberg all made their for-
tunes in the kind of investment banking that came
into vogue after Wall Street decreed that social
responsibility and business were antithetical.
The New York real estate developers now
advising the presidentSteven Roth and Rich-
ard LeFrakspent their professional lives (as
did Trump) in a mosh pit with politicians, city
regulators, 50-story crane operators, cement
mobsters and the motley crew of characters,
unsavory and otherwise, responsible for the
New York skyline and the surrounding areas
malls, golf courses and housing developments.
Trumps billionaires dont pay much in taxes,
and most dont think they should pay much more.
They loathe regulations, and they are ferociously
competitive. They all know each other. They
finance each other. And they all compete with
one another, says Holly Peterson, journalist,
author of It Happens in the Hamptons and daugh-
ter of Peter Peterson, a New York billionaire not in
Trumps camp. They sniff each other like dogs.
But none of them areagain, like the presi-
dentburrowed into New York high society. In
1983, when Paul Fussell wrote his book Class:
A Guide Through the American Status System, he
said one sign of top status was inherited wealth,
and another the discreet display of that wealth.
Those rules dont apply anymore, at least not in
New York society. Trump and his billionaires are
elaborately and publicly rich, and while some of
their dads were wealthy, they didnt all start out
that way. Schwarzman, the chairman of Trumps
Strategy and Policy Forum, is the son of a Pennsyl-
vania dry goods store owner, and he now divides
his time between a 37-room Park Avenue triplex,
a Hamptons estate and villas in Palm Beach,
Florida, and Jamaica. He is famous for blowing
millions on his birthday bashes. Icahn went to a
public high school in Far Rockaway, long before
he bought himself a 177-foot yacht.
With the exception of Ross and his $250 mil-

NEWSWEEK 28 A P R I L 14 , 2017
 lion art collection, they arent aestheteseven
if their names are sometimes chiseled into the
granite of gracious old public properties like the
main building of the New York Public Library
(Schwarzman) or embossed in brass on the soar-
ing buildings that house their companies.
Some New York billionaires are known for their
noblesse oblige or devotion to civic causes, but
not this crew. They are social-circuit philanthro-
pists. Former Mayor Michael Bloomberg invested
his name and money advocating for gun control
and famously pushed for a more environmentally
friendly New York City while he was in office.
Peterson, Schwarzmans former partner, put $1
billion into an economic think tank. And, along
with Bill Gates, Warren Buffett and 40 other bil-
lionaires, he signed the Giving Pledge, in which all
promised to donate the majority of their wealth to
charity. Schwarzman gave the New York Public
Library $100 million, but only after being mocked
a month before in The New Yorker for stinginess.
(He has given, but not remotely what he could,
They all compete with one another. They
sniff each other like dogs.
sniffed one anonymous critic in that article.)
Financial writer James B. Stewart has described
how Schwarzman had trouble booking a prime
table in the Grill Room at the Four Seasons, a
high-society lunchtime scene. Schwarzman
asked his then-partner, Peterson, about it, who
explained, It takes more than just money.
Trumps billionaires, while some of the richest
men in New York City, are a tier below the cul-
tural-financial establishment, the aristocracy. I
think the nature of all these guys is that they are
FROM LE FT: TODD KO ROL /CANADIAN PRESS/AP; STEVE M AC K / WIREIMAGE /GET T Y
not a part of a power or moneyed establishment,
says one Manhattan private equity investment
banker who knows most of them. You can be
very, very rich without being terribly important
here. Its not like [Trump] has assembled a cabal
of pathbreakers who disrupted the 21st century.
They have been disruptors of another sort
as vulture capitalists or, more euphemistically,
investors in distressed companies. Icahn was one
of the first corporate raiders, and he invented
greenmail, a now-outlawed 1980s practice in
which big New York money would swoop in, buy
up a block of stock, then force a companys board
to buy it back or risk a takeover. Among his many
pelts in a career of corporate raiding, Icahn gets
credit for killing the airline giant TWA.
Like Icahn, but of a generation younger, Fein-
berg made his name buying up and reorganizing
companies. He founded the ominously named
Cerberus Capital (in Greek mythology, Cerberus
was the three-headed dog who guarded the gates
of Hades), which picked apart companies like
Anchor Hocking, a glass factory in Ohio, bringing
down a small town with ita community tragedy
told in the best-seller Glass House. Feinbergs real
passion is weaponry and military contracting; he
bought up American gun companies and founded
a weapons conglomerate called Freedom Group
that, among other offerings, produces automatic
weapons favored by the likes of the Sandy Hook
school shooter. He also owns a private military
training site, and his DynCorp is a leading defense
contractor. Feinbergs name is rarely published
without the qualifiers mysterious or
reclusive. Last year, a corporate spy
reported to The New York Observer that
Feinberg warned his Cerberus share-
holders to stay out of the news. We try
to hide religiously, he said. If anyone
at Cerberus has his picture in the paper and a pic-
ture of his apartment, we will do more than fire
that person. We will kill him. The jail sentence
will be worth it. (None of the billionaires in this
story responded to requests for comment.)
New Treasury Secretary Steve Mnuchin,
though not a billionaire (net worth $500 million),
STEVE ROTH
$1.1 billion
Provenance
Bronx, New York
1941. Undergrad at
Dartmouth, Tuck
School of Business
MBA.
Company
Chairman and
CEO of Vornado
Realty Trust, which,
according to Crains,
holds 50 buildings
and is New Yorks
largest commercial
landlord.
Trump Post
Co-chairman,
Trumps
Infrastructure
Committee
NEWSWEEK 29 M A R C H 2 4 , 2017
is another profits-over-people legend. He bought
a California bank after the 2008 housing crash
and rehabilitated it by evicting tens of thousands
of people, including many elderly and veterans.
The subsequent proteststhe newly homeless set
up camp around his Los Angeles mansioncon-
tributed to the demise of his second marriage.
Retired New York Post society columnist Liz
Smith has known Trump since the 1970s, and
she watched New York society at first recoil from
him, and then give in, as the corporate raiders
who became Trumps billionaire buddies took
over Manhattan. The current importance of
money and big business and no ethics is discour-
aging, she says. In the beginning, the upper
crust were all looking at the fact that [Trump]
was a rich man, and they thought they could
extract money from him for their charities. They
found out fairly quick he was stingier than they
were. I think the billionaires are supporting him
with trepidation. They are nervous. They depend
on the presidency for stability. They are patriots,
most of them. They cant help it if theyre rich.
WHAT DO YOU GIVE TO THE MAN WHO
TAKES EVERYTHING?
Trumps billionaires share his two chief goals: a
massive tax overhaul and deregulation, allowing
them to make even more money. The 99 percent
have only the dimmest understanding of the strat-
egies by which the 1 percent operate and profit. To
most Americans, for example, bankruptcy is a
disaster, a catastrophic credit rating hit, a personal
failure and embarrassment suggesting sleeping in
ones car or moving back home with Mom and
Dad. For Trumps billionaires, bankruptcyor as
Trump put it, the chapter lawsis just another
tool in the box, which includes various legal forms
of stock manipulation, shorting pensions, crafting
commercial building exchanges to avoid taxes
and forcing a distressed or targeted company to
buy back its own stock to raise its price.
Another magic trick of billionaire-dom is not
paying taxes. Buffett has pointed out that he and
other billionaires pay lower taxes than a school-
teacher. Trump has avoided paying hundreds of
millions in taxes over the yearslegallyand so

You can be very, very rich [in New York

City] without being terribly important.
STEPHEN National Car Rental equity company
concerns, Burger King after the mythical
FEINBERG and Air Canada, and three-headed dog at
$1.2 billion the $1 billion defense the gates of Hades,
Provenance contractor DynCorp. so you know the list is
At one time, it also too long for this brief
Bronx, New York, 1960.
owned a piece of entry. To pick but a
B.A., Princeton.
General Motors, and it few, after his Cerberus
Habitat profited from the tax- Capital played a big
Divides his time payer-funded bailout role in gutting Ohios
between a $50 million of the auto industry. Anchor Hocking Glass
Manhattan townhouse Big Toy Co.), he turned to
(the former Egyptian collecting gun compa-
He owns a private nies, and his Freedom
Embassy, which boasts 800-acre military site
its own movie theater) Group now controls
outside Memphis, at least a dozen
and a 2,500-square- Tennessee, called Tier
foot home in gun manufacturers,
1, which has shoot- including companies
Connecticut. ing ranges, on-road that make the assault
Company and off-road driving rifle used in the Sandy
courses, and a para- Hook massacre and
Cerberus Capital Man- chute-drop zone, as
agement LP, a hedge other mass shootings.
well as an urban-com-
fund, private equity bat compound Trump Post
shop and investment designed to look like An unofficial adviser
bank with assets an Afghan village. He is on the intelligence
of $120 billion and also an avid big-game community. Donald
stakes in at least 50 hunter. Trump at one point
companies, including suggested he would
a grocery store chain, Famous Evil Deed assign him to investi-
Alamo Rent a Car and He named his private gate intelligence leaks.
 WILBUR ROSS
$2.5 billion
Provenance
Weehawken, New
Jersey, 1937.
Undergrad at Yale.
MBA, Harvard.
Company
Founded WL Ross &
Co. LLC.
Big Toy
Maintains a $125
million art collection
with his wife.
Famous Evil Deed
His Cabinet
confirmation was
nearly derailed over
his partnership with
Russian oligarchs in
the Bank of Cyprus,
which is believed
to be a money-
laundering hub.
Trump Post
Commerce secretary.

have his billionaires. Trumps administration has
made it very clear that it will expand tax benefits
for billionaires. Mnuchin promised during his
confirmation hearing that there would be no
absolute tax cut for the upper class. But lower
taxes for the rich were behind the Republican
rush to repeal Obamacare and replace it with their
still-born Trumpcare bill. The nonpartisan Con-
gressional Budget Office estimated the proposal
would have left 24 million more people uninsured,
mostly older and poorer Americans, while giving
top earners a $158 billion tax savings on invest-
ment income. Trump blurted out the truth in a
campaign-style speech in Louisville, Kentucky,
FROM LE FT: DOW J ONES EVEN TS; DREW ANG ERER /G ET T Y
taxed at 24 percent, thanks to the AMT.
The top executives of private equity firms
like Schwarzman, Icahn, Feinberg and, until he
divested, Rossall theoretically qualify for the
carried interest deduction, which halves their
tax rates. When Obama was stalking the carried
interest deduction in 2010, Schwarzman nearly
wet himself. Its a war, he said at a July 2010
board meeting. Its like when Hitler invaded
Poland in 1939. He later apologized.
Sweet tax deals arent just for Wall Street. Real
estate magnates like Trump can take advantage of
a deduction Congress carved out for them in the
1990s. While average Joes who lose money on real

a week before the plan failed. Weve got to get
this done before we can do the other, he told the
crowd. In other words, we have to know what
this is before we can do the big tax cuts.
Trumps tax overhaul remains short on
details, but one version gives the top 1 percent
of Americans a 6.5 percent tax savings, and sav-
ings of 1.7 percent or less for middle and lower
earners. Trump has promised to kill the alter-
native minimum tax levied on people like him,
when their deductions can zero out their tax
bill. According to his 2005 tax bill, Trump was
estate deals can no longer take full deductions,
people who qualify as real estate profession-
als (Trump, LeFrak and Roth) can deduct their
losses. Congress also allows developers to deduct
the supposed depreciation of their property val-
ues, depending on the property type, despite the
fact that real estate generally increases in value
over time. That means, according to Morris Pearl,
formerly managing director at the BlackRock
Fund and director of the pro-tax Patriotic Million-
aires, developersand their heirsnever have to
pay tax on property. There are certain things the

NEWSWEEK 31 A P R I L 14 , 2017
 RICHARD LEFRAK $6.5 billion
Provenance
New York City, 1945. B.A. Amherst
College, J.D., Columbia
University.
Company
Like Trump, LeFrak is the son of a real
estate magnate who inherited and
expanded a large New York family
brand. LeFraks father came to America
as a designer for Tiffanys and started
a company in 1905 that (like Trumps
father) built middle-class housing in
Queens. The Lefrak Organization is
now one of the biggest landlords in the
tristate area, with some 94,000 rental
units. It also owns oil companies and
operates as a private equity investor.
Favors to Trump
After Trumps inaugural address,
LeFrak went on CNBC and tried to
calm the public, claiming his friend has
more good sense than he gets credit

FROM TOP: PHIL MCCARTEN/REUTERS; REUTERS

for. Theres always a bit of negotiating
posture in a lot of the things he says.
Trump Post
Co-chairman, Trumps infrastructure
committee.

free market cannot do, he says. If you prefer a ROBERT WOODS WOODY
safer society over the long term, you want regula- JOHNSON IV
tions. But the billionaires have a different perspec- $6.3 billion
tive on things than other people. If you are Steve Provenance
Schwarzman and your insurance company goes New Brunswick, New Jersey, 1947.
out of business because of shady deals, you dont Undergrad at University of Arizona.
need the insurance regulator, you just find other Company
insurance. If you are Steve Schwarzman, you pay Johnson Co. Inc. a private investment
about half the amount of taxes as other well-paid firm. But his real fortune derives
from his inherited piece of the
New Yorkers. Very few people care about carried Johnson & Johnson global medical
interest tax deduction, but Schwarzman thinks he products multinational, founded by
his great-grandfather Robert Woods
deserves it. Maybe he thinks there is a shortage of Johnson in 1885.
people willing to be fund managers, so we need to Big Toy
offer them special tax incentives. The New York Jets
Besides slashing their taxes, Trump's billion-
Famous Evil Deed
aires have very specific requests and are not shy
Not known around Manhattan for
about expressing them. Special regulatory adviser doing evil (unless youre a Jets fan)
Icahn is a majority investor in a Texas oil refinery but considered a little too mellow.
that could have saved $205.9 million last year were A stoner in college, he once took a
break from a party in Arizona to uri-
it not for the Environmental Protection Agencys nate, fell off a cliff and broke his back.
renewable-fuel standard, which requires refiners Trump Post
to ensure that corn-based ethanol is blended into Ambassador to the U.K., a position
fuel. Since Trumps election, Icahn has engaged in once filled by the likes of Joseph
a lobbying blitz to change that rule. Kennedy and five men who later
became president. His only known
Trump is looking to tear up the Dodd-Frank raft connection to Britain is that the Jets
of regulations on the financial industry. He also once played a game in London.

NEWSWEEK 32 A P R I L 14 , 2017
announced plans to roll back the work of the U.S.
Consumer Financial Protection Bureau, which
lawmakers passed to protect consumers from
predatory lending practices after the 08 crash. He
also signed an executive order that set the stage
for rescinding the fiduciary rule, ultimately allow-
ing financial advisers to again sell plans to clients
that benefit the advisers themselves.
Trumps billionaire boys club is theoretically
on board with his anti-globalist stand. Com-
merce Secretary Ross announced in March that
the formal process of renegotiating the North
American Free Trade Agreement was imminent.
He has announced plans to collect billions of
dollars, mainly from China, in fines for breaking
U.S. sanctions and other global trade rules. But
nationalism is only a billionaires concern in the
limited ways his holdings are affected by interna-
tional affairs or global trade wars. While Trumps
alleged ties to Russians could prove his political
If anyone at Cerberus has his picture
in the paper and a picture of his
apartment, we will do more than fire
that person. We will kill him.
NEWSWEEK 33 A P R I L 14 , 2017
downfall, in the world he and his billionaire posse
inhabit, national borders are much less important
than the relationships between multinational fief-
doms and the banks that back them.
The Trump Organization does deals all over the
world, from Dubai to Istanbul to Moscow, but the
presidents global branding operation is capital-
ism lite compared with, say, Rosss multinational
empire. Before his confirmation hearing, Ross
agreed to divest hundreds millions of dollars in
assets, including his piece of the Bank of Cyprus,
which the Russian mob has reportedly used for
money laundering. He is keeping his stake in a
transoceanic tanker giant called Diamond S Ship-
ping Group Inc. The Center for Public Integrity
looked at that companys operations and found
its vessels sail under Chinese flags, and one of its
ships has traveled to an Iranian portwhich Dia-
mond S has said was legal. Ten percent of its busi-
ness comes from a Swiss company with stakes in
Russian national oil giant Rosneft. Rosss interna-
tionalism is hardly unique. Feinbergs DynCorp
has reportedly trained Afghan police and has con-
tracts in Saudi Arabia. Roth is building a New York
apartment tower for the ber-wealthy financed
by nearly a billion dollars in Bank of China loans.
If theres one issue that binds almost all New
York billionaireseven those who dont support
Trumpits a loathing of federal regulations,
especially on the financial industry but also on
commercial developments and industry. While
not as historically active fighting regulations
as, say, the Koch brothers, Icahn cant wait for
Trump to deregulate everything. He hailed his
friends inaugural speech as a sign that our
dangerous slide towards socialism is over.
In his presidencys first few months, Trumps
signature achievement has been ripping out regu-
lations covering everything from Wall Street to
pollution to food safety to firearms. His billion-
aires know how all this will improve their bottom
lines. What remains to be seen is whether average
Americans will reap any benefits, besides their
newly won freedom to drive cars without mileage
or emissions standards, take medications for
off-label uses, drill for oil in national parks and, if
mentally ill, buy a handgun.
IF YOU WANT TO
KNOW WHY THE U.S.
ECONOMY IS A MESS,
LOOK TO THE HARVARD
BUSINESS SCHOOL
AND ITS ARMY OF
CRAVEN MBAS
BY DUFF MCDONALD
NEWSWEEK 35 A P R I L 14 , 2017
 In the aftermath of the 2008 financial crisis,
much of the country was enraged because not
a single Wall Street hotshotthe guys who
got us into the messwas prosecuted.
While there are many financiers who could have
been made to take the perp walk, theres also a case
to be made that the fault lies with those who laid the
intellectual foundation upon which a market-driven
financial crisis could happen in the first place.
That brings us to Michael Jensen, a tenured finance
professor at Harvard Business School, where he has
spent the bulk of his career. Few still believe in the
message he sold everyone on in the 1980snot even
at HBSbut the damage is done, and his legacy is an
ugly one. So why does he still have a job? He has ten-
ure, for starters, but the other reason is that when Har-
vard Business School talks about making the world
a better place, its just posturing. What its about is
making money. And in the 1980s, Jensen brought the
school a lot of money and (for a few years) intellectual
credibility. But thats getting ahead of the story.
In 1970, Nobel Prizewinning economist Milton
Friedman published an essay in The New York Times
Magazine titled The Social Responsibility of Busi-
ness Is to Increase Its Profits. Flouting the midcen-
tury view (and that of the most influential faculty at
the Harvard Business School) that the best type of
CEO was one with an enlightened social conscience,
Friedman claimed that such executives were highly
subversive to the capitalist system. His tone was
snide. [Businessmen] believe that they are defend-
ing free enterprise when they declaim that business
is not concerned merely with profit but also with
promoting desirable social ends, that business has
a social conscience and takes seriously its respon-
sibilities for providing employment, eliminating dis-
crimination, avoiding pollution and whatever else
may be the catchwords of the contemporary crop of
reformers. In fact they areor would be if they or
anyone else took them seriouslypreaching pure
and unadulterated socialism.
He then described the concept of the executive as
agent of the companys shareholders: In a free-en-
terprise, private-property sys-
tem, a corporate executive is an
employee of the owners of the
business. He has direct respon-
IF YOU WANT TO GET
sibility to his employers. That NOTICED IN ECONOMICS,
responsibility is to conduct the
business in accordance with
YOU PRETTY MUCH HAVE TO
their desires, which generally TAKE ALARMIST STANCES.
NEWSWEEK
will be to make as much money as possible while con-
forming to the basic rules of the society.
Friedman didnt shy away from taking alarm-
ist stances. If you want to get noticed in econom-
ics, you pretty much have to do sojust ask Paul
Krugman. [Speeches] by businessmen on social
responsibility, Friedman wrote, may gain them
kudos in the short run. But it helps to strengthen
the already too prevalent view that the pursuit of
profits is wicked and immoral and must be curbed
and controlled by external forces. Once this view is
adopted, the external forces that curb the market
will not be the social consciences, however highly
developed, of the pontificating executives; it will be
the iron first of Government bureaucrats.
Setting aside the hysterical tone of the above, as
well as its exaggerationsthe idea that the pursuit
of profit is wicked has never been prevalent in
the United StatesFriedman made a compelling
argument not just to those in whose interests he
argued (shareholders) but to a managerial class that
was on the verge of a nervous breakdown. Imagine
the beleaguered CEO of a major American firm in
the 1970s, hectored by employees, environmen-
talists and public opinion, all while being besieged
by products from Japan that werent just better but
also cheaper.
Friedman was suggesting the release of those
people from their obligationscontractual or oth-
erwiseto anyone but the shareholder. Theyd let
their good nature get in the way of getting the job
done, he was arguing, and it was time to throw off
such nave notions for the good of the country
nay, for capitalism itself.
It was a remarkable intellectual sleight of hand.
Executives who act in ways most of us would consider
moralwith an eye to the environment or some other
social goalare, Friedman said, acting immorally.
When Joel Bakan interviewed Friedman for his 2005
book, The Corporation: The
Pathological Pursuit of Profit and
Power, the economist repeated
the point hed made nearly 40
years before, but with a twist.
In Friedmans view, hypocrisy
is virtuous when it serves the
bottom line, Bakan observed,
36 A P R I L 14 , 2017
 [whereas] moral virtue is immoral when it does not.
Even in 2005, Bakan was able to find a professor at
HBS who was willing to channel Friedmans brand
E DUA R DO MUNOZ /R EUT ERS; PR EVIOUS SPR E A D: OLI VER BURSTON/GET T Y
of cynicism [that is] old-fashioned, mean-spirited,
and out of touch with reality. According to then
HBS professor Debora Spar, corporations are not
institutions set up to be moral entities. They are
institutions which really only have one mission, and
that is to increase shareholder value.
Just a small sample of people whove actually set
up corporations would seem to suggest that such a
blanket statement is entirely without merit. Yvon
Chouinard, the CEO of Patagonia, certainly had a
larger mission in mind. John Mackey, co-founder
of Whole Foods, wouldnt agree with that premise.
It also seems likely that the founders of Harvard,
itself a corporation, wouldnt have either.
Whats truly unfortunate is that if one considers the
TOO PIGGY TO FAIL: Public outrage over the
rapacious practices that led to the 2008 financial
crisis spurred the Occupy Wall Street movement
but brought about few changes.
+
NEWSWEEK
work of midcentury thinkers at HBS, the faculty stood
almost alone in insisting that character had a part to
play in management. Until it decided to hire the man
who thought managers had no character at all.
The Unholy Birth
of Corporate Raiders
BY THE LATE 1970s, after nearly three-quarters of a
century of existence, Harvard Business School had
carved out a nice little niche in the management
universe. It had proved itself a dependable supplier
of prescreened and highly motivated graduates to
big business. HBS was still a dependable supplier of
highly motivated graduates in the 1980s, but they
werent going to big business anymore. They were
headed to Wall Street and consulting.
HBS also continued to put a high gloss on the
management myth of the day, but those myths
were increasingly finance-related, in particular the
37 A P R I L 14 , 2017
merits of shareholder capitalism. And it continued
to deliver pseudo-intellectual capital that practi-
tioners could use to justify their decisions. In the
1980s, HBS had abandoned its mission of trying to
educate an enlightened managerial class. Instead, it
threw its lot in with Wall Street as it was dismantling
the edifice of American industry HBS had helped
build. HBS had nurtured the professional manager
from his birth and then helped to kill him.
The main way it did so was by endorsing the
innocuously named principal-agent theory pop-
ularized by Friedman. While much of the faculty of
HBS was still trying to figure out how to help Amer-
ican management resurrect its reputation and its
fortunes as the 1980s began, Michael Jensen, then a
professor at the University of Rochesters business
school steeped in the University of Chicagos free
market tradition, was making sure the good name
THE TROUGH SHALL SET YOU FREE: Milton Friedman
was the godfather of a new kind of business leader-
ship, one that deemed moral virtue immoral when it
doesnt serve the bottom line.
+
NEWSWEEK
of managers stayed buried. Along with William
Meckling, the dean of Rochesters business school
(and a graduate student of Friedmans), Jensen
wrote a 1976 paper that would change everything.
In Theory of the Firm: Managerial Behavior,
Agency Costs and Ownership Structure, he laid
the groundwork for the most radical change in the
hierarchy of power in corporate America since the
robber barons gave way to professional managers.
Arguing that managers had become too entrenched
and lacked discipline and accountability, Jensen and
Meckling posited that investors were more trust-
worthy than managers as custodians of the American
corporation. Managers werent going to voluntarily
reform, they said, so the system had to be adjusted so
that they would be forced to do so. No longer would
they be their own judge, or be judged by a jury they
had picked, that is, their board. The market was
henceforth to be judge, jury and executioner.
Until Jensen came along, executive pay was largely
tied to company sizethe highest-paid CEOs ran the
38 A P R I L 14 , 2017

+ IN A 1994 paper Jensen wrote with Meckling, The
NO, BRO: Lehman Bros. was one of the few errant
firms that were allowed to go under during the
2008 crisis. Most of the other big money folks got
some form of bailout or dispensation.
largest companies. But the unproductive diversifica-
tion of the conglomerate era had resulted in excess
capacity, flat or declining profits, and stagnant share
prices. As a result, the Dow Jones Industrial Average
was basically flat from the mid-1960s through the
early 1980s. That excess capacity played a large part
in what Jensen called the capital market restructur-
ing revolution of the 1980s. Companies sitting on
large piles of cashand there were many, because
executives back then were loath to return money to
shareholderssuddenly became the target of hos-
tile acquirers. The age of investor capitalism began,
and its heroes were not CEOs but corporate raiders
like Carl Icahn and T. Boone Pickens.
A wave of deregulation then created the active
market for corporate control, with the new belief that
the shareholder was supreme, absolving managers
of responsibility to any stakeholderemployees,
communities, society itselfexcept shareholders.
The bottom line was all that mattered.
John McArthur, then dean of HBS, liked Jen-
sens message and invited him to HBS as a visiting
professor in 1984. In a 1999 vanity project about
McArthurs tenure, The Intellectual Venture Capital-
ist, HBS trotted out a rationale for hiring him: Jen-
sen had been interested in testing his unorthodox
FROM LE FT: GEORGE ROSE /GET T Y; MARY ALTAFFER /AP
ideas against the experiences of practitioners and
had agreed to come to HBS on a temporary basis
to get increased access to high-level decision mak-
ers in business. Hogwash. Theory of the Firm
was testable only in the sense that Keynesian eco-
nomics is testable, or a theory
of whether a hurricane might
sweep beachfront houses out to HYPOCRISY IS
sea is testableyou can debate
the issues until youre blue in
VIRTUOUS WHEN IT SERVES
the face, but at some point, you THE BOTTOM LINE.
NEWSWEEK
just have to see what happens.
A course grounded in agency theory that Jensen
developed at HBSThe Coordination and Control
of Markets and Organizationswas designed to
make students more tough-minded and shift them
from the stakeholder model of organizational pur-
pose. It became one of the most popular electives at
the school. Agency theory wasnt new, but Jensens
resurrected form of it provided academic justifica-
tion for the takeover movement, and HBS provided
its revolutionary soldiers.
Ethics-Free MBAs
Nature of Man, he cited the story of George Ber-
nard Shaw asking an actress if she would sleep
with him for a million dollars. When she agreed, he
changed his offer to $10, to which she responded
with outrage, asking him what kind of woman he
thought she was. His reply: Weve already estab-
lished that. Now were just haggling about the
price. The authors then concluded that were
all whores. Like it or not, individuals are willing
to sacrifice a little of almost anything we care to
name, even reputation or morality, for a sufficiently
large quantity of other desired things.
The solution they offered was premised on this
cynical view of man and, having started from the
assumption that we are all whores, they naturally
ended up with prescriptions for making us well-
behaved whores. Unlike theories in the physical
sciences, wrote Sumantra Ghoshal, a professor at
the London Business School, in his 2005 paper, Bad
Management Theories Are Destroying Good Man-
agement Practice, theories in the social sciences
tend to be self-fulfilling. This is precisely what has
happened over the last several decades, converting
our collective pessimism about managers into real-
ized pathologies in management behaviors.
In other words, if everybody assumes youre a
whore, you might as well grab as much money as
possible while youre still in demand. [By] prop-
agating ideologically inspired amoral theories,
business schools have actively freed their students
from any sense of moral responsibility, concluded
Ghoshal. Managers were not to be trusted; share-
holders were. It was one of the most remarkable
about-faces in the history of education. And by hir-
ing Jensen, HBS threw its lot in with the cynics.
Graduates of HBS had always
been drawn to finance, but in the
1980s they began heading to Wall
Street and private equity firms in
droves. Whereas in 1965 only 11
percent of HBS MBAs entered
39 A P R I L 14 , 2017

the fields of consulting or investment banking, by
1985 the two fields took in 41 percent of the schools
graduating class. And many of them would play a sig-
nificant role in downsizingthat is to say, gutting
the traditional manufacturing and product firms that
previous HBS graduates had helped build.
The shift is indicative of the MBAs nose for power.
Before the 1970s, companies increasing cash piles
had lessened their dependence on banks. But as
those cash piles evaporated, the pendulum had
swung back in finances favor. In a capitalist econ-
omy, power equals money, and between 1983 and
1992, the proportion of professional managers in the
nations top 1 percent of household wealth holders
showed a marked decline, while that of people work-
ing in finance spiked. And so thats where the MBAs
went. For most of the 20th century, social organi-
zation in the United States orbited around the large
corporation like moons around a planet, wrote
University of Michigan business administration
professor Gerald Davis in Corporate Power in the
21st Century. But by the time Jensen was through,
any lingering doubt about the purpose of the cor-
poration, or its commitment to various stakehold-
ers, had been resolved. The corporation existed to
create shareholder value; other commitments were
means to that end.
Business educators legitimized the notion that
good management might mean dissolving the
firm to improve shareholder return, wrote man-
agement historian J.C. Spender in BizEd magazine
in 2016, without concern for the social costs to
employees who lost their jobs or to communities
that lost employers.
Ah, yes: all that nonsense about the social
responsibility of business. It turned out that was
all just posturing. Recent studies by the Aspen
Institute show that when students enter business
school, they believe that the purpose of a corpora-
tion is to produce goods and services for the benefit
of society. When they graduate, they believe that it
is to maximize shareholder value.
Jensen provided intellectual underpinning for
the leveraged buyout boom in two Harvard Busi-
ness Review articles during the 1980s, arguing that
the threat of being taken overand firedeffec-
tively created a market for corporate control, which
helped executives stay focused. He also argued that
the high indebtedness engendered by leveraged
buyouts forced executives to
be much more focused on their
operations of their companies.
And finally, if and when exec-
HBS HAD NURTURED THE
utives did participate in LBOs PROFESSIONAL MANAGER
by amassing their ownership
stake, their incentives would
FROM HIS BIRTH, AND THEN
then be directly linked to the HELPED KILL HIM.
NEWSWEEK 40
+
WHY IS THIS MAN SMILING? Jensens papers and
teachings released CEOs, institutional investors
and Wall Streeters from the obligation of consider-
ing anything but their own narrow wants and needs.
companys stock price. Following Jensens argu-
ment, takeovers and LBOs would cure the nations
economic woes.
Twenty-two percent of the 150 largest public
companies in the United States as of 1980 had
merged or been acquired by 1988, with another 5
percent taken private. The highly public spectacle
of the takeover of RJR Nabisco was an object lesson
for all CEOs who werent used to looking over their
shoulders. Downsizing became the hymn song
of the managerial church. Thanks in large part to
President Ronald Reagans tax cuts and deficit
spending, the U.S. economy found its footing again
after 1982. However, as Walter Kiechel pointed out
in a 2012 article in Harvard Business Review, unlike
in the 1950s, [the] rising tide didnt lift all boats.
In the name of beating foreign competition, com-
pleting (or avoiding) takeovers, and serving the
interests of shareholders, it became acceptable to
sell off businesses that didnt fit the new corporate
strategy and to lay off battalions of workers.
Jensen was rolling at that point, spewing out
blanket claims, such as Corporate takeovers do
not waste resources; they use assets productively,
and Shareholders gain when golden parachutes
are adopted. And it all came with the good seal of
approval of Harvard Business School.
Jensen, who joined HBS full-time in 1989,
expanded his remit with a 1990 Harvard Busi-
ness Review article, CEO Incentives: Its Not How
Much You Pay, but How. Along with co-author
Kevin Murphy, he opened the piece with one of the
most absurd remarks in the history of executive
compensation: There are serious problems with
CEO compensation, but excessive pay is not the
biggest issue. The relentless focus on how much
CEOs are paid diverts public attention from the
real problemhow CEOs are paid.
Three years later, President Bill Clinton, who had
campaigned on reining in executive compensation,
eliminated the tax deductibility of any portion of
executive compensation above $1 million, unless
the compensation was performance-based. It
doesnt get much better in the annals of unintended
consequences than this: Not only did the law
increase many pay packages
salaries converged around the
$1 million markbut the shift
away from salary and toward
stock options resulted in the
greatest explosion in execu-
tive compensation in history.
In 1992, CEOs of Fortune 500
A P R I L 14 , 2017
ABHIJ IT BHATL EK AR / MINT/GET T Y
firms made an average of $2.7 million. By 2000, it
was up to $14 million. Stock options as a percentage
of compensation rose from 19 percent in the 1980s
to nearly 50 percent in 2000. What also increased:
short-termism and the tendency for executives to
manage earnings, using aggressive accounting to
give Wall Street analysts a smooth earnings tra-
jectory on which to base their forecasts.
Jensen was right that CEO compensation would
rise in the case of outperformance, but he was wrong
about the fact that CEOs would suddenly be at risk
of being fired for underperformance. The compen-
sation of Americas corporate executives shot up in
the 1990s, regardless ofand sometimes in spite of
their performance.
Jensens finance-based theory of the corporation
lost significant credibility in the wake of the 2007-
2010 financial crisis. Specifically, observed Gerald
Davis, the ideas that financial markets are infor-
mationally efficient and that it is appropriate for
corporate governance mechanisms to guide corpo-
NEWSWEEK
rations toward share price as their North Star were
revealed to be, well, extremely misguided. The
merits of this view are debatable, wrote Davis;
less so are the hazards to the economy when it is
broadly accepted by executives, investors, and poli-
cymakers. Indeed, some would go so far as to argue
that the financial view of the corporation helped
create the crisis we are in now. There is no doubt
that finance and financial markets are central to
what public corporations do. What is less clear is
that an ownership society is a workable model for
prosperity and security.
Way back in 1951, the chairman of Standard Oil of
New Jerseythe company founded by the ultimate
robber baron, John D. Rockefellersaid: The job of
management is to maintain an equitable and work-
ing balance among the claims of the various directly
affected interest groupsstockholder, employees,
customers, and the public at large. During the Jen-
sen era, many people forgot about that.
But then we all sort of remembered it again. Even
shareholder-friendly Jack Welch, the longtime
CEO of General Electric, eventually came around.
In March 2009, he told the Financial Times, On the
face of it, shareholder value is the dumbest idea in
the world. Shareholder value is a result, not a strat-
egy. Your main constituencies are your employ-
ees, your customers and your products. Managers
and investors should not set share price increases
as their overarching goal. Short-term profits
should be allied with an increase in the long-term
value of a company.
Maybe, just maybe, were not all whores.
Rendering Business
History Irrelevant
EVEN WHEN people started to get a little nervous
about the effects of shareholder capitalism on the
American economy, Jensen wasnt apologetic.
Indeed, he went in the other direction, ripping into
fellow members of the HBS faculty if they strayed
too far from his orthodoxy. William Lazonick got an
HBS faculty post in 1984 at the invitation of Alfred
Chandler, followed by a stint as president of the
schools Business History Conference. He made
FROM LE FT: HARPERCOLLINS; RICHARD DREW/AP
the mistake of challenging the new king of finance
when in 1992 he presented his paper Controlling
the Market for Corporate Control: The Historical
Significance of Managerial Capitalism in a seminar
centered on the work of Jensen.
+
CLASSES DISMISSED: In his book, McDonald argues
that the Harvard Business School turned its back
on the philosophy it had espoused for 75 years in
order to draw in more Wall Street money.
42 A P R I L 14 , 2017
+
MARKET LAID BARE: Two tenets espoused by HBS,
the primacy of shareholder value and unrestricted
compensation of CEOs, set up a frenzied market Street firms were all sending money back to HBS.
that almost crashed the world economy in 2008. The net effect of it all was that agency theory ren-
dered business history irrelevant.
Lazonick was known to be a critic of Jensens Lazonick thinks his experience shows intellectual
ideas on shareholder value, but a critic in the aca- cowardice. Almost immediately after they hired
demic senseyou sat across from each other on a [Jensen], shareholder value ideology quickly took a
podium during a seminar, or you traded barbs in dominant position at HBS, even though, from their
the gentlemanly forum of academic journals. Not own experience, the vast majority of faculty mem-
this time. Some sparks flew during the seminar, bers did not believe it. But there was absolutely zero
Lazonick recalls. Jensen was king of the hill, and critique. Even from those who should have known
he objected to medaring to question him. He betterthere wasnt a peep. Its quite sad.
was livid that he had been set up in front of all his Both [Harvard President] Derek Bok and [HBS
colleagues to be critiqued by an outsider. He told Dean] John McArthur should have known better,
[HBS professor Thomas] McCraw not to invite me but they went out of their way to recruit Jensen,
back, and I wasntfor another 17 years. And keep says Lazonick. I asked a member of the faculty who
in mind that the year before is actually still there about
that, I had been president of it, and he said that McAr-
the Business History Confer- thur thought thats where the
ence. Have no doubt about IF EVERYBODY ASSUMES money was, and hiring Jensen
it, the most powerful man at YOURE A WHORE, YOU MIGHT would bring in donations from
HBS in the early 1990s was Wall Street.
Michael Jensen. He was AS WELL GRAB AS MUCH Lazonick saves his greater
much more engaged with stu- MONEY AS POSSIBLE WHILE condemnation for those at
dents, those students were all HBS who should have stopped
going to Wall Street, and Wall YOURE STILL IN DEMAND. the rise of Jensen. They had a

NEWSWEEK 43 A P R I L 14 , 2017
tradition at HBS which could have said that this isnt
the way business should be operating, Instead, they
just went with the flow. They kowtowed to Jensen.

The Pretense of Knowledge

IN 2004, again with Murphy, Jensen wrote, Remu-
neration: Where Weve Been, How We Got to Here,
What Are the Problems, and How to Fix Them. It
wasnt that anybody was looking to Jensen for solu-
tions to the problems hed played a large part in creat-
ing, but consider his quandary: Just a decade before,
he was the man with all the answers. By 2004, no
one had any more questions for him; his ideas were
bankrupt. So he asked them of himself. Two hun-
dred years of work in economics and finance implies
that in the absence of externalities and monopoly,
he thundered, social welfare is maximized when
each firm in an economy maximizes its total market
value. Ignoring the gaping holes in the remark
those externalities include, say, pollution that
companies end up shirking responsibility for, or
the crumbling of a community when a CEO closes
a factory simply to juice share pricethe implied
increase in social welfare was just that: implied.
Jensens thesis was given its final kick out the door
when Ghoshal at the London Business School laid
out a comprehensive rejection of agency theory. He
began by dismantling Friedmansand by extension,
Jensensargument that shareholders are the own-
ers of a company. Theyre not, at least if by own
one means it in the way one can own a car or an
iPhone. Weknow that the value a company creates
is produced through a combination of resources con-
tributed by different constituencies, Ghoshal wrote.
If the value creation is achieved by combining the ment), Jensen claimed to have revealed a heretofore
resources of both employees and shareholders, why unrecognized critical factor of production. That fac-
should the value distribution favor only the latter? tor? Integrity. Jensen claimed to offer an actionable
Why not adjust the model? Because its nice and pathway to increasing integrity and concluded that
neat. Whats more, its probably beyond the capabil- integrity thus becomes a necessary (but not suffi-
ity of economists to come up with the mathematics cient) condition for value maximization and for a
that describe how human organization, with all its great life. There may be no better evidence for the
complexities, really works. Such a theory would not pitfalls of the tenure system than this.
readily yield sharp, testable proposition, nor would it What did Michael Jensen achieve, in the end? He
provide simple, reductionist prescriptions, observed helped a generation of businesspeople lower its opin-
Ghoshal. With such a premise, the pretense of ion of itself and give in to its baser motives. For all his
knowledge could not be protected. Business could not economic equations and insistence on the testability
be treated as a science, and we would have to fall back and refutability of the logic of his opinionand it was
on the wisdom of common sense. just that, an opinion he released
In recent years, Jensen has been CEOs, institutional investors and
on a futile quest to alter his legacy. Wall Streeters from the obligation of
He showed his kinder, gentler side in
ON THE FACE OF considering anything but their own
2011 with his paper Putting Integrity IT, SHAREHOLDER narrow wants and needs.
Into Finance. Along with co-author Management adopted those
Werner Erhard (the creator of the
VALUE IS THE DUMBEST parts of agency theory that suited
Erhard Seminars Training move- IDEA IN THE WORLD. their needs and ignored the rest.

NEWSWEEK 44 A P R I L 14 , 2017

American managers loaded their companies with
debt, per Jensen, they started paying themselves in
equity and options, per Jensen, and they did every-
thing they could to juice the value of that equity.
And in doing so, they sacrificed long-term value for
short-term gain, often engaging in outright fraud to
bring it about.
Heres one thing Jensen didnt talk about much
when he talked about the wondrous world of hos-
tile takeovers: the insider trading it unleashed.
Those crimes first came to light in 1986, when
Dennis Levine of Drexel Burnham Lambert was
arrested, accused of making $12.6 million from
insider trading and charged with obstructing jus-
tice and attempting to destroy records. Levine
BROOKS KRAF T/CORBIS/GE T T Y
implicated Ivan Boesky, an arbitrageur, who then
implicated Martin Siegel (HBS 71), formerly of
Kidder Peabody but then working for Drexel Burn-
ham Lambert. And heres a fun fact for your next
cocktail party: It was insider trading in the shares of
Enron, which Michael Milken had helped finance,
NEWSWEEK
+
IVY DRIP: The most powerful man at HBS in the
early 1990s was Michael Jensen. Those students
were all going to Wall Street, and Wall Street firms
were all sending money back to HBS.
that tipped investigators off to Levine. A number of
HBS graduates were ensnared in the ensuing inves-
tigation, including Siegel, Paul Bilzerian (77) and
Ira Sokolow (81).
Fred Joseph (63) was CEO of Drexel during this
scandal, although he denied any involvement in
the insider trading schemes and claimed he was
only guilty of surprising navet. The feds bought
that, and the Securities and Exchange Commission
merely reprimanded him for failing to properly
supervise his star employee.
In a 2005 interview with The New York Times, Jen-
sen discussed the propensity of executives to be
overly optimistic about forecasts that support lofty
share prices. [If] executives would present the mar-
ket with realistic numbers rather than overoptimistic
expectations, the stock price would stay realistic. But
I admit, we scholars dont yet know the real answer
to how to make this happen. Thats called ethics,
and Jensen is right: Harvard Business School doesnt
know how to teach ethics as well as it knows how to
teach financial engineering, and it never will.
In 2003, the Harvard Business School added a
Leadership and Corporate Accountability course
that sounds like a direct repudiation of Jensen:
decisions that involve responsibilities to each of a
companys core constituenciesinvestors, custom-
ers, employees, suppliers, and the public, with dis-
cussions on insider trading rules, the fall of Enron,
human character, employee responsibilities, labor
laws, corporate citizenship, socially responsible
investing and serving the public interest. But in
this, its influence is akin to pushing on a string,
because Michael Jensen helped create a Franken-
stein monster no one knows how to kill.
A REPORTING NOTE:
When I began researching The Golden Passport,
from which this excerpt derives, I asked the Harvard
Business School if it would be interested in making
administrators and faculty available for interviews or
providing access to the schools extensive historical
collection. To my surprise, HBS told me that it had zero
interest in engaging with me, and would not make a
single person at the school available for an interview,
from the dean on down. HBS did offer to make histori-
cal material available to me on an ad hoc basis, except
for any material from the past 50 yearssomething
that I could get myself, thanks to the internet. I asked
on a handful of occasions over the next three-plus
years if theyd changed their mind, and when I went
back to them one final time, they declined again.
ADAPTED FROM THE GOLDEN PASSPORT. COPYRIGHT
2017 BY DUFF MCDONALD. REPRINTED HERE WITH
PERMISSION OF HARPER BUSINESS, AN IMPRINT OF
HARPERCOLLINS PUBLISHERS.
45 A P R I L 14 , 2017
 NEW WORLD
INNOVATION SKIN AI TECHNOLOGY
GOOD SCIENCE
TACTILE ADVANTAGE
An artificial skin could
take your temperature and
prompt you to say ouch!
ITS A GOOD bet most humans will someday be
at least part cyborg, and Zhenan Bao, a profes-
sor of chemical engineering at Stanford Univer-
sity, wants to have some skin in the game. Bao
+ is working on an artificial epidermis that could
ORGAN GRINDER: improve the life of people with prosthetic limbs
Baos faux skin
needs to be flex- or skin grafts and make it so people wont have to
ible, stretchable, take off their wearable fitness trackers.
self-repairing
and, eventually, We are trying to mimic the properties of
ALE X C HORTOS AND BAO GROUP/STANFORD UNIVERSIT Y
biodegradable. human skin, says Bao. That includes making the
synthetic skin stretchable and self-repairing. Her
biggest challenge: create a material that can feel.
When sensing touch, our skin will fire electrical
pulses and send through the nerve system to our
brain and allow our brain to understand whether
its pain or a hot object. Our materials and devices
also need to be able to do that. The skin shes test-
ing expands when heated, which lowers its electri-
BY cal conduction and allows the brain to read the
JESSICA FIRGER temperature on the skins surface.
@jessfirger Shes tested out her skin on the brains of mice
NEWSWEEK
SPACE DRUGS
modified so the area of their brain that typically
transmits the sense of touch is ultra-sensitive to
light and saw that the brains responded when the
electric skin was stimulated by bright light.
Bao, recently named a LOral-UNESCO for
Women in Science laureate, began work in flexi-
ble electronics some 20 years ago. She set out to
make bendable smartphones and foldable televi-
sions, but after arriving at Stanford 10 years ago,
she realized her work had other applications as
well. She says companies like Fitbit could use
her electric skin to create more reliable personal
devices. Once placed on the users skin, the wear-
able could measure vital signs, such as tracking
heart rate, blood pressure and blood sugar to
monitor a person for heart attack or diabetes.
Even though sensors and wearables exist, they
are very large and bulky and uncomfortable to
wear, she says. So with the electronic materials
were developing, we hope to make them as thick
as tattoosbut also have the same function.
47 A P R I L 14 , 2017
 N E W W O R L D /AI
A NEW LEASH ON LIFE
Some of the best minds of our
generation came to the U.N. to decide
whether AI will turn humans into pets
IN A ROOM at the United Nations overlooking
New Yorks East River, at a table as long as a ten-
nis court, around 70 of the best minds in artificial
intelligence recently ate a sea bass dinner and
could not agree on the impact of AI and robots.
This is perhaps the most vexing challenge of
AI. Theres a great deal of agreement around the
notion that humans are creating a genie unlike
any thats poofed out of a bottle so faryet no
consensus on what that genie will do for us. Or
to us. Will AI robots gobble all our jobs and ren-
der us their pets? Tesla CEO Elon Musk thinks so.
He just announced his new company, Neuralink,
which will explore adding AI-programmed chips
to brains so people dont become little more than
pesky annoyances to thinking machines.
At the U.N. forum, organized by AI investor
Mark Minevich, IPsoft CEO Chetan Dube said
AI will have 10 times the impact of any technol-
ogy in history in one-fifth the time. He threw
around figures in the hundreds of trillions of dol-
lars when talking about AIs effect on the global
economy. The gathered AI chiefs from compa-
nies such as Facebook, Google, IBM, Airbnb and
Samsung nodded their heads.
Is such lightning-fast change good? Who
knows? Even IPsofts stated mission sounds like
a double-edged ax. The companys website says
it wants to power the world with intelligent sys-
tems, eliminate routine work and free human
talent to focus on creating value through innova-
NEWSWEEK
tion. That no doubt sounds awesome to a CEO.
To a huge chunk of the population, though, it
could come across as happy-speak for a pink slip.
Apparently, if youre getting paid a regular wage
to do routine work, youre about to get freed
from that tedious job of yours, and then you had
better innovate if you want to, you know, eat.
The folks from IBM talked about how its Wat-
son AI will help doctors sift through much more
information when diagnosing patients, and it will
constantly learn from all the data, so its thinking
will improve. But wont the AI start to do a better
job than doctors and make the humans unneces-
sary? No, the IBMers said. The AI will improve the
doctors, so they can help us all be healthier.
Hedge fund guys said robot trading systems will
make better investing decisions faster, improving
returns. They didnt seem too worried about their
careers, even though some hedge funds guided
solely by AI are already outperforming human
hedge fund managers. Yann LeCun, Facebooks
AI chief and one of the most respected AI practi-
tioners, says AI will be used to discover and help
eliminate biases and bring people togetheryet
for now, AI gets accused of uncovering our indi-
vidual biases and serving up content that con-
firms and hardens them, thereby making half the
country mad at the other half.
Grete Faremo, executive director of theUnited BY
Nations Office for Project Services, beseeched KEVIN MANEY
technologists to slow down a bit and make sure @kmaney
48 A P R I L 14 , 2017
 the stuff theyre inventing solves the worlds washer, or in some cases the eras newfangled
great problems without making new ones. But machines called computers. In New York City
another speaker, Ullas Naik of Steamlined Ven- alone, the story said, because of automatic
tures, hinted at how quantum computing will elevators, there are 5,000 fewer elevator oper-
soon greatly speed up development of thinking ators than there were in 1960. Tragic in the
machines. He believes quantum computing is day, maybe, but somehow society has managed
closer than most people think, and in case you without those elevator operators.
dont know, a quantum computer will be so freak- That 1965 story asked what effect the elim-
ishly powerful, it will make any computer today ination of jobs would have on society. Social
seem as old-fashioned as an Amish buggy. thinkers also speak of mans need to work for
Put all this together and AI might
be the most wonderful technology
weve yet created, helping humans
get to a higher planeif it doesnt
turn against humans, Terminator
AI WILL HAVE 10 TIMES
style. Though most likely it will land THE IMPACT OF ANY
somewhere in between.
Heres a question worth consider-
TECHNOLOGY IN HISTORY
ing: Is this AI tsunami that different IN ONE-FIFTH THE TIME.
from changes weve already weath-
ered? Every generation has felt
technology was changing too much
too fast. Its not always possible to calibrate what his own well-being, and some even suggest that
were going through while were going through it. uncertainty over jobs can lead to more illness,
In January 1965, Newsweek ran a cover story real or imagined. Sounds like the same discus-
SMOCK THERAPY:
IBMs Watson titled The Challenge of Automation. It talked sion were having today about paying everyone a
SPENCER PL AT T/GET T Y

is already making about automation killing jobs. In those days, universal basic income so we can get by in a post-
doctors smarter
with their diagno- automation often meant electro-mechanical job economy, and whether wed go nuts without
ses, so how long contraptions on the order of your home dish- the sense of purpose work provides.
before AI replaces
doctors? Just like now, back then no one
+ knew how automation was going to
turn out. If America can adjust to
this change, it will indeed become
a place where the livin is easy
with abundance for all and such
space-age gadgetry as portable
translatorsand home phone-com-
puter tie-ins that allow a housewife
to shop, pay bills and bank with-
out ever leaving her home. The
experts of the day got the technol-
ogy right but whiffed on the livin
is easy part.
So for every pronouncement that
AI is differentthat the changes it
will drive are coming at us faster and
harder than anything in historyits
also worth wondering if were see-
ing a rerun. For all we know, 50 years
ago a group of technologists might
have got together at the U.N. and
expressed pretty much the same
hopes and concerns as the AI group.
Except that was 1965. They
wouldve talked over tuna casserole.
At least the sea bass served at the
U.N. confab represents progress.

NEWSWEEK 49 A P R I L 14 , 2017
 N E W W O R L D / DRUGS
PICK A NUMBER, ANY NUMBER
An insider explains how U.S.
prescription drug prices are set
THE U.S. SPENDS more than any other high-
income country on health care, and prescrip-
tion drugs account for about 17 percent of all
health care spending. President Donald Trump
has vowed to lower drug prices but has not yet
proposed any concrete approach for doing so.
There was no mention of the issue in the Ameri-
can Health Care Act proposed by House Repub-
licans in March.
More than $370 billion per year is spent on pre-
scription drugs in the United States, exceeding all
other countries. Pharmaceutical companies often
justify the cost of drugs as necessary to support
the research and developmentthe R&Dof
innovative treatments. If we want cures for devas-
tating diseases, they say, we have to pay for them.
But that explanation is disputed.
Research by the Tufts Center for the Study of
Drug Development put the cost of developing a
new drug at $2.6 billion. That research was sup-
ported by the pharmaceutical industry, however,
and the estimate has been questioned.
Shefali Shah has spent more than 15 years
helping pharmaceutical companies navigate
issues surrounding the cost of new medications.
To pinpoint the magic dollar amount for a given
medication, she has worked with biotech giants
like Genentech, small biotechs bringing their
first products to market and external consulting
companies. Now an independent adviser, Shah
spoke with Newsweek about drug prices: where
they come from, who negotiates them and how
they got so incredibly complicated.
NEWSWEEK
NEWSWEEK: What is the difference between
pricing and reimbursement?
SHAH: Pricing and reimbursement are entangled
to some extent. Drugs may ultimately have sev-
eral different prices, but the first one is the list
price, which comes from the manufacturer. The
list price is not necessarily the price that most
people pay. In some cases, hardly anyone pays
it. But the list price serves as the basis for many
subsequent calculations.
Reimbursement is the amount the insurer
pays for the drug, whether its a private insurer,
Medicare or Medicaid. Typically, depending on
the type of drug, the insurer pays the physician
directly, the drug manufacturer or an intermedi-
ary, such as a pharmacy benefit manager.
The PBM pays a heavily discounted price.
Physicians buying the drug directly also receive
a discount. So do wholesalers. None of these
entities pays the list price.
What drugs do physicians purchase, and from
whom do they purchase?
Typically, the drugs purchased by physicians are
those that must be given by infusion. But physi-
cians usually make these purchases through an
intermediarya PBM or a wholesaler such as
McKesson or Cardinal Health. These compa-
nies buy the drugs from the manufacturer, and
the physician buys it from the intermediary.
The physician then administers the drug to the BY
patient in the office, bills the insurer and is then JESSICA WAPNER
reimbursed by the insurer. @jessicawapner
50 A P R I L 14 , 2017
 +
BLOOD MONEY:
Luillia van Lanen
was so embar- That sounds very complicated.
rassed that she
couldnt afford her
heart medicine that
Its really complicated. Purchasing prescription
drugs is different from other kinds of purchas-
DETERMING THE
she lied to her doc-
tor about taking it.
ing. When you buy a car, you are the deci- PRICE OF A NEW
sion-maker. You are the customer, you choose
what car you want, and its up to you whether
DRUG IS BOTH
or not you want to pay whatever it costs. You go SCIENCE AND ART.
to a dealership and buy a car. With pharmaceu-
ticals, the customerthe patientis rarely the
decision-maker. Usually, the physician makes
the decisions. And the patient doesnt pay the And there are bad actors, which we have heard
cost directly either. The patients arent usually a great deal about recently. Drug prices are
writing the check. There may be a copay or coin- increasing astronomically without explanation.
surance, but the majority of the cost is usually List prices are set extraordinarily high. Im going
covered by the insurer. to be focusing on the good actors.
Determining the price of a new drug is both
Unless the individual has an insurance plan science and art. So many different elements
with a high deductible on prescription drugs must be considered, and theres no formula. All
or no insurance coverage at all. the different factors must be weighed. The clin-
Correct. ical value is the most important aspect. Is this
drug helping people live longer? Is it helping
How does a pharmaceutical company deter- them live better? Also, how does it compare to
mine an appropriate list price for a drug? competitors? Are there competitors? Will payers
Before diving into this explanation, I think its pay for the drug? Can patients afford the copay?
important to emphasize that there are a lot of What is the average copay for a patient? What
MORRY GASH/AP

good actors in the pharmaceutical industry. In are other drugs priced at? How much will the
my experience, most people in this field want to company have to give in government-mandated
innovate and create drugs that benefit patients. discounts, such as the 340B clause in Medicaid?

NEWSWEEK 51 A P R I L 14 , 2017

NEW WORLD/DRUGS
What are the cost-of-doing-business discounts
to PBMs or wholesalers?
We often hear about the cost of development,
and that is an important part of the story. But I
think these expenses are considered very early
on, when a company is first deciding whether or
not to develop a drug.
Does everyone pay a discounted price?
Usually, a PBM is the entity buying from the drug
company, and the insurer reimburses the PBM.
In a flow chart of this chain, the pharmaceutical
company would be at the top. That company sells
the drug to a wholesaler or PBM, and the PBM
sells to the physician, if the drug is infused, or,
if the drug is oral, it may be shipped directly to
the patient.
Do PBMs serve a purpose?
PBMs do serve some purpose in the pharma-
ceutical supply chain. I am not an expert in this
specific area, but I believe that some of these
companies have value-added services beyond
transporting drugs from the manufacturer to
the physician or other end user. Sometimes they
contribute to disease management by ensuring
patients adhere to their prescriptions, for exam-
ple. But they dont all do this, and I dont know if
they are delivering enough of a benefit to justify
the cut theyre taking.
Does the extent of the discount vary?
Yes. The more mass-market drugs, such as statins
and other commonly used medications, are usu-
ally more discounted for PBMs. Some of the more
niche drugs wont be assigned as big a discount.
Every disease is treated very differently.
Whether the drug is oral or intravenous makes a
big difference because they are reimbursed totally
differently. Intravenous drugs are reimbursed to
physicians, whereas oral drugs are reimbursed to
the point of sale, such as the local retail pharmacy
where the patient picked up the prescription.
Its so confusing.
It is. Im helping my mother figure out Medicare,
and if this werent my job, I dont know how I
would help her navigate all this.
NEWSWEEK
Lets say the list price is $10. How
might the pricing structure for the
different entities follow?
In this example, the PBM might pay $6. Because
the PBM wants to make a profit, it charges the
insurer $8. The insurer wont necessarily shell
out all $8; instead, that entity will pay $6 and the
patient will have a copay of $2.
In this example, the pharmaceutical company
would not be taking a loss at $6.
No. Figuring out profit is complicated. A pill is
relatively inexpensive to make. The chemicals
might cost just 50 cents, but that doesnt account
for the money that went into the development.
Do you agree that drug prices are too high?
I think there is a way to bring more of a value-
based system into pricing and reimbursement.
Right now, our reimbursement system imposes
DRUG PRICES ARE INCREASED
ASTRONOMICALLY WITHOUT
EXPLANATION. LIST PRICES ARE
SET EXTRAORDINARILY HIGH.
a lot of limitations on how creative we can get
with pricing. If prices could be based more on
value, I think that would address the problem
to some extent.
What would that look like?
The really expensive drugs are usually the
infused products. These tend to be large mol-
ecules that cant fit in a pill. These are the
more novel drugs. They are more expensive
to develop, more expensive to make and more
expensive to buy.
Currently, the way these are reimbursed is
the physician buys the drug from an intermedi-
ary, administers the drug to the patient, bills the
insurer, and the insurer has a set percentage it
will reimburse.
Sometimes, a drug may be used in two differ-
ent cancer types. In one type, the patient may
live six months longer with a great quality of
life, justifying the $100,000 price tag. But in the
other cancer, the benefit is not as great. But the
price for the second disease cannot be changed
without also changing the price for the first dis-
ease. Thats a big dilemma for companies.
52 A P R I L 14 , 2017
 +
FALL COLORS:
Okajima says mar-
ble-sized pellets
dropped from a sat-
ellite will burn up in
the atmosphere as
they fall, produc-
ing the ultimate
fireworks show.
METEORS TO ORDER
A JAPANESE STARTUP IS CREATING ON-DEMAND
ARTIFICIAL SHOOTING STARS
ON NOVEMBER 18, 2001, astron-
omy student Lena Okajima was
braving frigid temperatures in
the mountains close to Tokyo. It
was her first time witnessing the
annual Leonid meteor shower,
and what she saw that night
thousands of shooting stars
streaking across the clear winter
skycaptivated her, charting her
path for the next decade.
In 2011, she founded Ale Co.,
which is dedicated to bringing
artificial shooting stars to the
masses. There are a lot of people
who enjoy seeing shooting stars,
but often you have to go up in the
mountains and freeze yourself to
actually see anything, says Rie
Yamamoto, Ales global strategy
director. With our stars, youll
be able to go to a restaurant or
rooftop bar and enjoy it with a
O G N EN T EO FI LOVS KI /R EUT E RS
beer in hand.
We want to create a new cul-
ture of enjoying shooting stars,
says Okajima, who through her
ambitious Sky Canvas Project
BY aims to hold the worlds first
SANDY ONG artificial meteor show, in early
@sandyong_yx 2019. The stars will come in
an array of different colors, burn
brighter and last up to 10 times
longer (close to three seconds),
as compared with naturally
produced shooting stars.
To create the artificial shoot-
ing stars, Ale will launch a micro-
satellite into orbit early next year,
approximately 310 miles above
Earth. The company has secured
a spot on a rocket to carry the
payload into space, but it cannot
reveal additional details because
it has signed a nondisclosure
agreement. The satellite will
contain up to 300 marble-sized
pellets, which when released will
fall toward Earth, burning up
in the atmosphere to produce a
dazzling display of light visible
across distances of over 120
miles on the ground. The pellets
are made from various elements
such as lithium, potassium and
copper, says Okajima, and vary-
ing their composition can result
in stars of different colors.
While the concept has never
been tested, aerospace engineer
Hugh Lewis of Englands Uni-
versity of Southampton says its
NEWSWEEK 53 A P R I L 14 , 2017
a feasible idea, based on pretty
well understood physics. The key
challenge will be to release [the
pellets] at the right altitude and
the right time, because its very,
very difficult to predict the timing
of re-entry and at what point
theyll start to burn up.
Its a task that Okajima and
her team have been tackling for
the past six months, with some
success. She says theyre now
able to discharge pellets at the
desired speed and anglefac-
tors crucial to precise re-entry
within an accuracy of 1 percent
of target values.
However, Lewis is worried
about introducing additional
objects into Earths already clut-
tered orbit. Its not a sustainable
activity that you would want to
encourage just for amusement.
Okajima says her project
will not just entertain but also
contribute to greater scientific
understanding of what the Earths
upper atmosphere is like and how
objects such as decommissioned
satellites can safely re-enter it.
Still, Ales main focus is to
paint the night sky with shoot-
ing stars. Its debut show is slat-
ed for early 2019 in Hiroshima. If
all goes well, the company hopes
to bid for a place to perform in
the opening or closing ceremony
of Tokyos 2020 Olympics.
For now, space develop-
ment is for governments, big
companies or the superrich,
says Okajima. But we hope our
shooting stars can be enjoyed by
everyone.

MUSIC ATHIESTS CULTS FAKE NEWS
NO REASON TO BELIEVE
The woman who got prayer out
of U.S. schools was no saint
HAVE YOU seen Ron Reagan on MSNBC lately?
Not on talk shows: In a commercial that ran during
Morning Joe and The Rachel Maddow Show, the for-
mer radio host and political gadfly promotes the
Freedom From Religion Foundation, a nonprofit
+
that is working to keep state and church separate,
THE WORD OF
NO GOD: OHair just like our Founding Fathers intended.
was loud, strong- Its shocking to see the son of a conservative
willed and foul-
mouthed. Her son icon preaching the word of no word, adding, with
says she was once a smile, that hes not afraid of burning in hell.
asked to leave a And its worth noting that the old advertisement
truck stop because
she was offending couldnt get on the air when it was produced two
the drivers. years ago. Atheism is having a moment in Amer-
ica, it seems, with comedian Ricky Gervais bat-
tling the forces of organized religion on Twitter,
plus Stephen Colberts The Late Show and Ste-
REG INN ELL / TORONTO STAR /G ET T Y
ven Pinker, a Johnstone Family professor in the
department of psychology at Harvard University.
There were pioneers in atheism, and they
werent all burned at the stake. The most hated
BY woman in America was what Life magazine
SEAN ELDER called Madalyn Murray OHair, whose suit against
@seankelder the Baltimore Public School System went to the
NEWSWEEK
DOWNTIME
CULTURE NAZIS
Supreme Court and ended prayer in public schools
in 1963. Her success there led to other challenges;
she protested when American astronauts read
scripture during space launches, and when a
nativity scene was mounted on the rotunda of
the Texas Capitol. She sued to have In God We
Trust taken off U.S. currency and to have under
God removed from the Pledge of Allegiance. In
the relatively god-fearing America of the 60s, she
was like a villain in wrestling. Big, loud and often
obscene, OHair was a natural on television.
She played the media very well, says Tommy
OHaver, who directed a film about OHair, The
Most Hated Woman in America (Netflix). She was
one of the original provocateurs, which we see
today in multitudes, he adds, name-checking
Ann Coulter and Milo Yiannopoulos.
Historicallywomen who have spoken loud
and clear about their well-founded thoughts
and ideas about things, they generally get called
pariahs or bitches or troublemakers, says actor
Melissa Leo, who channels OHair in the movie
with padding and an obstreperousness turned up
55 A P R I L 14 , 2017

D OWNTIME/ATHIESTS
to 11. Is that who she really is, or is that something
she was being to get a point across? If she sat there
quietly and politely and spoke about the wrongs
of civil rights [abuse], who the fuck would listen?
Leo, who won an Academy Award as the
long-suffering mother in The Fighter, yells that last
line somewhat for effect, but she has clearly given
OHairs bad rep some thought. As the founder
of American Atheists, OHair received a lot of
donations among the piles of hate mail. Quite a
bit of that money ended up in a private account
in New Zealand; her creative bookkeeping was
partly responsible for her demise. On the subject
of OHairs self-enrichment, Leo is also forgiv-
ing. Everybodys got to earn a living, and it was
already established that it was very difficult for
her to work within the system.
Even by contemporary standards, OHairs
family life was unconventional. She lived with
her devout parents while railing against religion.
Both of her sons were born out of wedlock, and
she filed her school-prayer suit in the name of the
eldest, William Murray Jr., who became the poster
child for atheism in America. The film depicts
young Bill entering his classroom with his mother
as the Lords Prayer is being recited; later, we see
an older Bill in an Alcoholics Anonymous meet-
ing, speaking of a sudden rush of sorrow that
brought him into the program. And then the meet-
ing ends with the assembled recitingthe Lords
Prayer. (Our father who art in heaven, hallowed
be thy name.) In 1980, Murray told his mother
he had embraced Jesus; a few years later, OHair
disowned him. Goddamn zombie 12-steppers
got ahold of him, says OHair in the film.
Every child has to make his rebellion, says
Leo. Thats what growing up is. And depending
on what the foundation is, the rebellion can be
the opening to an adult relationship between the
grown-up child and the parent, or it can be the
shutdown of the relationship entirely.
In his book, My Life Without God, and in subse-
quent interviews, Murray has portrayed OHair
as a sort of demonic stage mother. My mother
loves confrontation, and she never hesitated to
use me as an accomplice in her schemes, he said
in a 2002 episode of Forensic Files. She wanted to
push the school prayer issue as far as she could.
NEWSWEEK
She wanted me to keep a record of prayer and
Bible readings in school. My mother made me a
spy in the cause of atheism.
And in Murrays telling, it was her godless ways
that killed her. My mother, brother and daughter
were murdered by fellow atheists, he said. David
Waters, the ex-con who kidnapped, murdered
and dismembered OHair, her granddaughter
and Murrays half-brother Jon Garth, had worked
for American Atheists and learned of her secret
accounts. Waters had stolen over $50,000 while
working for OHair (she liked to hire ex-cons,
according to Murray) and was able to avoid jail
time by paying the money back. But that didnt
prevent OHair from writing a scathing denunci-
ation of Waters in the American Atheists newslet-
ter in which she discussed his past crimes (hed
been jailed as a teenager for knocking his prosti-
tute mom down a flight of stairs before pissing on
her) and made insinuations about his sexuality.
Youve sucked more cocks than your mother!
Leos OHair tells Waters in the film. And this
while hes holding a gun. (A stream of profanity
SHE WAS ONE OF THE
ORIGINAL PROVOCATEURS.
came out of my mothers mouth, Murray once
said. She was asked to leave restaurants; she
was once asked to leave a truck stop because she
was offending the truck drivers.)
The scenes between the familys abduction
(August 27, 1995) and their murder, weeks later,
were largely a matter of conjecture for OHa-
ver and his writing partner, Irene Turner. Their
previous feature, An American Crime, was also
based on a real-life murder case (OHaver calls
Most Hated Woman a true-crime biopic), and
hes hoping people will come for the noir and
stay for the religious-freedom issues.
I didnt approach this film with an atheist
agenda, says OHaver, who was raised Catho-
lic and does not call himself an atheist. I just
thought she was an interesting character, and I do
believe in the separation of church and state, and
that was an important thing she accomplished.
But then when they released the trailer [for Most
Hated Woman] on YouTube, I was looking at some
of the comments, and it was all either people say-
ing, Go, atheism! or Oh, you atheist heathens
are going to burn in hell! I didnt know people still
really thought this way. Of course, they do.
56 A P R I L 14 , 2017
 +
BODY AND SOLE:
Nike quietly
discontinued the
Decade after the
mass suicide, mak-
ing it a ghoulish
collectors item.
The Ultimate Kicks
The Heavens Gate cult Nike sneakers can
still sometimes be found on eBay
WHATS THE dress code for
a mass suicide? The occasion
calls for some level of formal-
ity, but one doesnt want to
overdress. Twenty years ago, the
Heavens Gate UFO cult chose
fitness-goth. When the bodies
of 39 members were found in a
suburban mansion in San Diego,
on March 26, 1997, they were
wearing matching outfits: bodies
covered in purple shrouds, black
shirts and sweatpants, patches
reading Heavens Gate away
team and black-and-white Nike
Decade sneakers.
Nike quietly discontinued the
Decade soon after the suicides,
but occasionally a pair will show
up on eBay. Theyre expensive.
One recent listingno doubt
pegged to the anniversary of the
suicidesfeatures an unworn pair
(size 12) recovered from a storage
DENIS POROY/AP
locker in Arizona. It was priced at
BY $6,660, an amount inflated, no
JOE VEIX doubt, because of the rarity of the
@joeveix shoe and the circumstances with
which it became associated.
The bodies discovered that day
werent really dead, according to
cult doctrine. They had merely
left their vehicles and trav-
eled to the next level, or the branded by that tragedy. Last
evolutionary level above human
(TELAH), escaping a soon-to-be
recycled Earth. Journeying to
TELAH was the long-term goal of
the cult, which started in the 70s,
and in 1997 the members finally
grabbed their chance. Their
leader, Marshall Herff Applewhite
(aka Do) claimed that behind the
approaching Hale-Bopp comet
was a spaceship that would take
their souls. All they had to do was
hitchhike by suicide.
On March 24, 1997, members
took turns eating pudding and
applesauce laced with pheno-
barbital, all of it washed down
with vodka. They then put
plastic bags over their heads to
asphyxiate themselves.
The suicides got a ton of
coverage, including a cover story
NEWSWEEK 57 A P R I L 14 , 2017
in this magazine, and generated
numerous jokes on the late-night
talk shows and a thousand hacky
variations of the Nike slogan Just
do it. All this provided some
uncomfortable attention for
Nike, which didnt respond to a
Newsweek requests for comment
on this article. The companys
only apparent public acknowl-
edgment of the matter was in
1997, a few weeks after the discov-
ery: Weve heard all the jokes,
company representative Jim
Small told Adweek. The Heavens
Gate incident was a tragedy. It had
nothing to do with Nike.
True, but the brand is forever
year, it was referenced in the
Frank Ocean song Nikes. In
2015, a Reddit post went viral
and was aggregated by multi-
ple blogs after a user reported
meeting the man who sold the
cult the shoes. Oh, is this for a
basketball team or something?
the salesman supposedly asked.
Somethinglike that, Apple-
white allegedly replied.
The post likely was a hoax. The
website Sole Collector confirmed
with the two survivors running
the Heavens Gate email account
that the shoes were purchased by
two members in bulk (and not by
Applewhite) for $548.45. They
turned out to be a look that Do
and the Class liked, the email
explained. They were also able to
get a good deal on them.
 D O W N T I M E / F A K E NEWS
TRUMP OWES ME $900!
The inventor of fake news squares off
against the current king of fake news
NOBODY KNOWS fake news better than Alan
Abel. He pretty much invented it.
The man has spent much of his 80-some years
finding outrageously strange and clever ways to
bamboozle the media. In 1959, when he was a
young man, Abel founded the Society for Inde-
cency to Naked Animals. The groups slogan: A
nude horse is a rude horse. The organization,
which declared it a matter of moralistic urgency
to make dogs and horses and other animals wear
pants, was a joke, but the Today show (among
other media outlets) took the bait. Even Walter
Cronkite believed it, Abel says. About putting
marina shorts on horses and a mumu on a cow!
That should be a tip right there. A red flag. What
do you mean you want to put a mumu on a cow?
Since then, Abel has typically been described
as a prankster or a media hoaxer. His career
far precedes The Onion, Facebook hoaxes and
Sacha Baron Cohen. During the 1970s, with help
from some collaborators, Abel fooled reporters
into believing that a hired actor was the Water-
gate informant Deep Throatand in 1980, he
executed his greatest hoax to date: He died.
Well, not actually. He faked his death from a
heart attack. He fooled The New York Times into
publishing an obituary, then re-emerged at a
press conference the day after the obit ran. Hes
alive (still) today. Hes (probably) 86.
Abels longtime enemy, however, has less of
a playful rapport with the media. Nobody talks
about fake news more obsessively than Don-
ald Trump, and 22 years ago the two men first
NEWSWEEK
clunked heads. It was 1994. The setting was
a book fair in New York City. Fifth Avenue
was closed to vehicular traffic, and the sidewalks
were thick with book stands. Abel set up a stand
to sell his own books on the sidewalk in front of
Trump Tower. Sales were good, but he was soon
confronted by a security detail from the Trump
building. Three of his security guards looked
like linebackers with the Giants, Abel recalls.
They said, You move, or well move you.
The guards informed Abel that the sidewalk in
front of Trump Tower is owned by Trump. He
retorted that its public property. They dis-
agreed, Abel says, and gave me five minutes
to move my books. A retired cop overheard the
dispute and came to Abels defense, saying that
the sidewalk is owned by the city of New York,
not Trump. No matter. The guards were ready
to get physical, so Abel packed up and moved.
Abel sued in small claims court and brought a
witness: the retired policeman who corroborated
that Abel had been ordered to move from pub-
lic property. The good news: He won. It was a
default judgment. Trump wasnt there to protest
it, he says. Because Trump never answers a
lawsuit less than 10 grand usually, and even then
hell settle over the phone for something less.
The bad news: Trump never paid up.
Abel found it perplexingly difficult to get his
$900, in part because Trump owns and runs
more than 200 distinct corporations, and Abel BY
needed to identify the correct one to collect his ZACH SCHONFELD
money. Id have to figure out the correct one @zzzzaaaacccchhh
58 A P R I L 14 , 2017
 +
RAISING CAIN:
Abel has a long
rsum filled with
pranks and hoaxes,
including once
raising himself
from the dead.

and where the bank is and get an order to serve

for the money, plus interest, Abel gripes. You
have to go through a lot of red tape to do things
A NUDE HORSE
like that. Thats why he doesnt worry about get- IS A RUDE HORSE.
ting suedbecause he knows he can defeat any-
body just with the paperwork.
For decades, Abel has kept up the fight to
obtain a sum that, for Trump, is essentially would keep the first $900 and give Trump the
laundry change. (Though Trumps dirty laundry rest of the millions.
seems more expensive than that of other pres-
idents.) Ive written probably a dozen letters ANDY, DID YOU HEAR ABOUT THIS ONE?
to Trumps legal department. And they dont Abel doesnt live in New York anymore. Hes
respond, usually. About 12 years ago, Abel says decamped to central Connecticut, but his sense
he traveled to Atlantic City, showed his judg- of humor remains devilishly sharp. In a spate of
ABEL FAMILY

ment to the local sheriff and ordered the guy recent conversations with Newsweek, he sounded
to auction off Trumps Taj Mahal casino: Abel as chipper and witty as ever, though distressed

NEWSWEEK 59 A P R I L 14 , 2017
by the state of politics under President Trump. gag, and it does not seem like one of his gags. For
Its gonna be the Old West again, he muses. one thing, the story is oddly specific and not very
Im serious about going to Canada maybe for similar to Abels previous hoaxes, which tend
a couple of years if possible and not having to toward the surreal (horses wearing underwear,
deal with all the wrath and all the anxieties peo- people fainting en masse) and have more of a
ple have. Especially road rage. I think thats the satirical bite. Plus, Abel says he is not interested
worst thing. I wont let my wife touch the horn in in spreading political misinformation in the age
my car when we drive. Shes very impatient, and of alternative facts. Everyones afraid of fake
she likes to honk. And I said, No more! news these days. I cant believe it, he says. [My]
Abels wife, Jeanne Abel, has been more than intent has been to amuse. Not to upset anybody
a spectator to his pranks. During the 1960s, she in the Electoral College or whatnot.
pretended to be a fictitious presidential candi- I requested proof.
date named Yetta Bronstein. In 1964, the Abels Abel offered to pull up the name of the retired
duped about 20 people into marching in support officer who served as his witness, but he would
of Bronstein outside the Democratic National have to sift through 50 storage boxes to find it.
Convention. Years later, Jeanne played along That would take time. Then, he emailed me the
when her husband played dead. That hoax earned
Abel the admiration of Andy Kaufman, the eccen-
tric performance artist whose fans often insist he
is still alive and faked his death in 1984.
Some fans have even latched onto the crackpot
theory that Kaufman has transformed himself
into an outrageous character of his own creation:
Donald Trump. Abel has expressed delight at the
thought that Trump is his old friend Kaufman in
disguise. Its not because that revelation would
make it much easier for him to collect his $900.

PEOPLE FAINTING EN MASSE

Now, the obvious question: Is Abel for real? How
do we know hes not duping us today? This is not
1959: It is easier than ever to fool the media, but it
is also easier than ever to figure out when you are
being fooled. Any journalist who searches Abels
name would immediately disregard his claims.
Even some old friends stopped speaking to him
after that death hoax. To them, its a dirty trick,
Abel says. You dont fool around with death.
But do you fool around with small claims court?
Abels trickery is legendary, and his relation-
ship with truth isunorthodox. The mans exact
age, for instance, is a matter of some confusion.
He tells me he was born in 1930 and is now 86.
When he died, in 1980, he was reported to be
50 years old. But when I first spoke with Abel
while reporting a different story in August, he
insisted he was 92, which either means he has
a Benjamin Buttonlike condition that causes +
SHOWER OF
him to age in reverse, or he lied about his age. GOLD: Abel hasnt
(The New York Times profiled him in 2003 and had much luck
noted that he declined to give his age last week collecting on his
judgment, so he
because, he said, the request is an invasion of offered to have
privacy. In December, though, Abel told me Trumps Atlantic
City casino auc-
this: Im in the 80s. Thats all Ill admit to. My tioned off to pay
wife is in the 70s. Shes younger than I am. And I the bill.
dont have her chained in the attic.)
But Abel insists the $900 judgment is not a

NEWSWEEK 60 A P R I L 14 , 2017
 notice of judgment he received from the Civil
Court of the City of New York. The document
is dated December 28, 1994. It lists the Trump DOWNTIME/FAKE N E W S
Organization as the defendant. The space pro-
vided for an index number is left blank. That
made me a bit suspicious. Abel successfully
faked his own death, for Christs sake. He hired
caterers and planned his own funeral. Surely, he
could forge a document.
I saw I needed to call the Civil Court of the City was probably too old to be searchable, espe-
of New York. I spent 20 minutes on the phone cially since I didnt have the case number. She
with several automated bots, none of whom were typed some names into her bulky computer,
willing to connect me with a human or comment which also looked like it was from 1994. But
on a piece of paperwork that is older than Hailee then something remarkable happened: Abels
Steinfeld. (I also reached out to the Trump Orga- name appeared.
nization inquiring about the judgment but have The judgment wasisreal!
not yet received a response.) Anna beamed with excitement. She tilted the
I saw one more way to confirm Abels claim of computer monitor to show me the record: Abel
having a claim against Trump: That is how, late filed the suit on November 18, 1994. The notice
on a Friday afternoon, I found myself poking was sent to Trump on November 25. The court
around the grim-looking basement of the New date was set for December 28. The defendant,
York State Supreme Court Build-
ing. Following the advice of an
employee in the county clerks
office, I entered a musty room
filled with stacks and stacks of
[TRUMP] DOESNT WORRY
moldy books of records dating ABOUT GETTING SUED
back to the 1920s. A clerk scowled BECAUSE HE KNOWS HE
when I said I was a reporter. She
said I wouldnt find anything
CAN DEFEAT ANYBODY JUST
about the judgment there. She WITH THE PAPERWORK.
said I could head down the hall to
another room filled with records
(ask for Raphael), but it proba-
bly wasnt there either. Or I could head down the listed as Trump Organization, never showed
block to 111 Centre Street: New York City Civil up. The details of the case matched Abels story,
Court. She pointed to her watch. Its 4:01, she as did the judgment in his favor: $900or
said. Theyre closing soon. $919.58 with interest.
I headed to New York City Civil Court. The judge, Wilfred OConnor, has been dead
The small claims office is housed on the third 20 years. There is no indication that Trump ever
floor of the New York City Civil Court. It is a paid up. These judgments often expire after 20
cramped room filled with faded signs that say years, Anna said, which would make it hard for
things like, Please note: The person you are Abel to collect his money now that his debtor is
suing must be in New York City. The office the president.
reminded me a bit of the waiting room in Beetle- No matter: Abel was thrilled to hear of my
juice, a bureaucratic purgatory peopled by law- findings. He wanted to take me to dinner to cel-
yers and distressed individuals trying to collect ebrate. He says he will reopen the suit by suing
whatever it is theyre owed. (But no shrunken Trump all over again. You have to stand up and
heads.) I am not a lawyer or a distressed debtee, fight, and thats my advice to people. I say, damn
which might explain why the clerklets call the torpedoes, full steam ahead. I think it was
her Annaeyed my request with friendly puz- Admiral Perry that said that.... So onwards and
zlement and curiosity. upwards! Lets organize a group. And well march
Anna asked me to step aside and wait for the on Washington.
parade of lawyers dropping off paperwork to Abel is confident hell finally collect his $900
subside. Finally, the lawyers cleared out, and during Trumps presidency. Unless he dies first.
AL AN ABE L

Anna agreed to search her computer records for And if you see his obituary in The New York
Abels judgment. She warned me that the case Times, make sure it isnt fake news.

NEWSWEEK 61 A P R I L 14 , 2017
 D O W N T I M E / N AZIS
THE METH IN THEIR MADNESS
A book detailing rampant drug use by
the Nazis is drawing praise and scorn
WHEN NORMAN OHLER was a kid growing up
in Germany, he and his classmates got one of
their early-and-often lessons on the Third Reich
in school one day. Back home, Ohler asked his
grandfather what role he had played in Nazi Ger-
many. He recalls his grandfather disappeared for
a few moments, then returned to hand him an
envelope containing his Nazi Party membership
booklet and a swastika pin. He didnt say much,
and Ohler says he was too young to know what to
make of this odd inheritance. But he was aware
that sometimes, when there was a problem in
the democratic West Germany of the 1980s, his
grandfather would say that under Hitler, this
never would have happened, and that he always
portrayed the Nazis as clean-cut.
Later, Ohler discovered that many Nazis,
including Hitler, werent as clean-cut as Grandpa
said, so he wrote a book about it, which was
released in the U.S. in early March with the title
Blitzed: Drugs in the Third Reich. (It was a best-
seller in Germany as Der Totale Rausch [The Total
Intoxication], published in September 2015, and
in the U.S. quickly debuted at the No. 12 spot on
the New York Times best-seller list.) Ohlers first
nonfiction book arguessoon in more than two
dozen languagesthat under the Nazi regime,
German civilians were high, their soldiers were
high, and their Fhrer was high.
He traces all this back to his grandfathers
nostalgia for the order of Germanys darkest
eracommon in 1980s West Germanywhich
made Ohler angry. As a teenager, he began hating
NEWSWEEK
Germany. He adopted leftist views and looked
for ways to resist right-wing developments, he
says. He decided that he could become a writer
and journalist, to uncover bad things in society
and help the democratic process.
He took university courses in philosophy and
cultural sciences, studied journalism and pub-
lished novels. He also wrote for film and spent
time in Tel Aviv and Ramallah, where he inter-
viewed Yasser Arafat about a month before
the Palestinian leaders death. He stumbled
on the topic of drugs in Nazi Germany through
his connection to Berlins thriving music scene.
His friend the DJ Alex Krmer is a pretty crazy
guy. And a history buff too. And a drug buff. He
really knows his drugs, says Ohler, who has not
been shy about sharing with the press that he
too experimented with drugs in his 20s. Krmer
told him that Nazis took loads of drugs, and
recounted a story about some folks he met who
had broken into a pharmacy in a former East
German neighborhood and found an old stash
of Pervitin, methamphetamine pills that were
popular during Nazi times. When Krmer tried
them, he got really high. Then he realized that
back in the Nazi days, people were actually using
strong drugs. They were pure and potent.
Ohler started developing characters for a
novel and visiting archives so that he could get
the facts about Nazi drug use right. But what I
found in the archives made me change my mind BY
about the genre of the book I wanted to write, STAV ZIV
he says. I thought this material is too, he @stavziv
62 A P R I L 14 , 2017
 pauses, searching for the right description, bri-
sante, as we say in German, is too hot to water it
down in a fictional work.
With guidance from Hans Mommsen, a well-
known German historian, Ohler continued
his research, interviewing experts and visiting
archives in Berlin, Koblenz, Munich, Sachsenhau-
sen, Dachau, Washington, D.C., and elsewhere.
He wanted to write about all aspects of drug use
and incorporated into Blitzed sections on the
history of pharmaceutical development in Ger-
many back to the 1800s, the experimentation and
excesses of the interwar Weimar Republic, the
prevalence of Pervitin in German society, the con-
sumption of the drug in the military, the impor-
tance of meth in keeping troops energized during
the early blitzkriegs, and the frantic Nazi efforts
to invent a wonder drug as defeat in World War
ONLY HUMAN: II became inevitable, including an experiment by
Hitler believed in the navy that had concentration camp prisoners
a German master
race, but as defeat march for hours on end to test new concoctions.
became inevitable The longest chunk of his book focuses on Hit-
KEYSTONE /GET T Y
in World War II, the
Nazis made frantic ler and his relationship with Theodor Morell,
efforts to invent who was appointed by the dictator as his personal
a wonder drug for
their troops.
+ its case, and then got more severe, saying he
NEWSWEEK
physician in 1936 and accompanied him ever
more closely almost until the end of his life. Morell
began treating his patient by injecting Hitler with
various vitamins, but in time added animal hor-
mones and finally stronger substances, including
Eukodal, whose active ingredient is the opioid
oxycodone. Ohler says a second doctor visited
Hitler after Claus von Stauffenberg tried to assas-
sinate the Fuhrer with an exploding briefcase in
1944. He treated the Fhrers burst eardrums with
applications of high-grade cocaine, something
Hitler apparently grew quite fond of.
The books jacket proudly sports praise from
Ian Kershawa British historian focusing on
20th-century Germany and a prominent biog-
rapher of Adolf Hitlerwho called Blitzed very
good and extremely interesting...a serious piece
of scholarship, very well researched.
But other historians took issue with both
Ohlers means and ends. Nikolaus Wachsmann,
a professor of history at Birkbeck College, Uni-
versity of London, and author of KL: A History
of the Nazi Concentration Camps, started out
with a gentle critique in his piece for the Finan-
cial Times, saying Ohlers account overstates
[eschews] nuance for headlines and appears
to mix fact and fiction. He ended his assessment
harshly, saying that Ohlers diligent researchis
buried beneath the breathless prose. Richard J.
Evans, historian and author, wrote in The Guard-
ian that Ohler makes sweeping generalizations
IN THE NAZI DAYS,
PEOPLE WERE USING
STRONG DRUGS
PURE AND POTENT.
that are wildly implausible. He called the book
crass and morally and politically dangerous,
but conceded the author diligently researched
in the German federal archives and other rele-
vant collections.
What Wachsmann called breathless prose
Ohler defends as his attempt to reach a broad
audience. He says he has read many German
history books that are horribly boring, and he
wanted to bring his sensibilities as a novelist to the
task. I tried to combine academic research with
the style of writing that I appreciate. I really didnt
want to write a boring book.
63 A P R I L 14 , 2017
 REWIND20 APRIL 14, 1997
YEARS
IN CROSSING THE BAR BY FRANK
DEFORD, ABOUT JACKIE ROBINSON
50 YEARS AFTER HE FIRST APPEARED
IN MAJOR LEAGUE BASEBALL

It was a tacit
segregation
that prevailed in
Yankee America,
an inequality most
whites winked
at, if indeed they
acknowledged it at all. Blacks had
a saying then that whereas down
South whites hated Negroes as a race
but could like certain individuals,
up North whites professed to like
Negroes as a race but did not care
for any of them as individuals.
 An extensive collection of
Trumps most memorable
promises, phrases and positions

KEVIN DIETSCH/UPI/CNP/MEDIAPUNCH/ALAMY
Donald Trump signs his first
executive order as president,
ordering federal agencies
to ease the burden of the
Affordable Care Act. His
predecessors plan extended
coverage to more than 20 million
previously uninsured people.

weWewillarehave
one country, one people, and
together one great future.

Campaign Speech, August 18, 2016

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